When WunWun expanded its Kozmo-like delivery service to San Francisco last month, the startup's CEO Lee Hnetinka bragged to the Chronicle that "companies like Amazon are now obsolete." Maybe the young CEO shouldn't be so quick to diss the thriving retailer—especially since he has a history of hoodwinking customers and running "criminal endeavors."
In the summer of 2012, Hnetinka co-founded a startup that rented multi-million dollar vacation homes in the Hamptons and turned them into party pads for teenagers. According to The East Hampton Star, Hnetinka allegedly told multiple homeowners that he was renting their property for his "family reunion." His company then re-rented homes for prom and graduation parties, reportedly earning upwards of $80,000 per week.
Hnetinka was ultimately arraigned on over 160 misdemeanor charges stemming from the business. A "deeply concerned" judge ordered him to be jailed for 24 hours after he provided "false information" in court. He was also accused to continuing to host paid parties after he was first arrested.
In addition to allegedly trashing homes and knowingly letting high schoolers drink, he charged high rents and refused refunds for customers that were quickly evicted by landlords. One parent described his business as a "bait-and-switch operation":
Both women maintain that Mr. Hnetinka ran a bait-and-switch operation, using a house at 2212 Noyac Road in Sag Harbor as the bait. Ms. Weiner, whose son Jordan, then a senior at Commack High School, had asked her to arrange a prom party for 35 teens, went to see the nine-bedroom house in February. Mr. Hnetinka, who showed it to her himself, "talked the talk," she said. "He knew exactly what to say."
Hnetinka allegedly called Weiner the day before the prom, saying a noise complaint was forcing him to switch locations. He assured her that the new location was "much nicer" and was his personal home. But his promises came up short:
It proved anything but for the 35 students, as it had only four bedrooms. "They were falling over each other," Ms. Weiner said.
Police knocked at the door at 7 a.m. on June 23, the day after the group arrived. The security guards, whose instructions were never to open the door to the police, were fast asleep, and a student let them in. The party was shut down.
For the students, the next few hours were nightmarish. First, they had to find their way home. The buses were gone. Parents drove out. One family rented two vans from an East Hampton livery company. Ms. Sachs and several members of her family shuttled many of them to the train station.
Students says Hnetinka would arrive at parties to greet his "guests," driving a Porsche. He had an extensive manual of rules for the kids, ordering them to "not speak" to police and that they were only allowed to drink liquor that was "clear."
The party company was not Hnetinka's first startup. In a 2011 profile of Hnetinka, Betabeat described him as an "enterprising former Hamptons broker" who had already run two startups. His first company, Leetto, burned through $100,000 before going belly up. He then founded a chat company called "Bubble" that also sputtered out.
According to New York court records, one prior civil case involving Hnetinka has been resolved. He had been sued in 2010 by Hamptons Escape, a vacation rental company, for alleged "breach of contract, and unjust enrichment."
But the tech press, which hasn't mentioned his criminal background, seemed to be more concerned with WunWun's claim to fast growth than its CEO's failures. Hnetinka's business plan to crush Amazon is just delivering things for free. Betabeat quoted the primarily tip-based delivery company as being "on fire," TechCrunch complimented their new look, and the Chronicle's profile on the startup was generous. Hnetinka also claims venture capitalists have forked over "millions" to his new business, but has yet to name the investors.