When Lawyers Send Letters

Square COO Keith Rabois Quits After Sexual Harassment Allegations

"I'm completely confident that all the facts will come out and I will be vindicated."
Mr. Rabois (Photo: Twitter)

Mr. Rabois (Photo: Twitter)

Earlier today, news broke that Square’s COO, Keith Rabois, had left the company. It was a strangely-timed departure, considering Square recently raised $200 million in a Series D. Now, the Wall Street Journal has broken the news that Mr. Rabois is embroiled in a sexual harassment claim from a fellow Square employee, and resigned so that the allegations would “not cause a distraction for the company.”

Steven Berger, the New York attorney representing the unnamed employee, said that Square had failed to take appropriate actions after the employee claimed he was being sexually harassed. Mr. Rabois told the Journal, “I’m completely confident that all the facts will come out and I will be vindicated.”

In a post published to his Tumblr, Mr. Rabois offered his version of events. According to the post, he met the unnamed employee through a mutual friend, and their friendship quickly blossomed into a romance. Mr. Rabois says the employee began working at Square several months after they began dating, following his recommendation to hire.

Writes Mr. Rabois:

Last week, a New York-based tax attorney threatened Square and myself with a lawsuit. I am told this lawsuit would allege that the relationship was not consensual, and would go on to accuse me of some pretty horrible things. I was told that only a payment of millions of dollars will make this go away, and that my career, my reputation, and my livelihood will be threatened if Square and I don’t pay up.

I realize that continuing any physical relationship after he began working at Square was poor judgment on my part. But let me be unequivocal with the facts: (1) The relationship was welcome. (2) Square did not know of the relationship before a lawsuit was threatened; it came as a complete surprise to the company. (3) He never received nor was denied any reward or benefits based on our relationship. And (4), I did not do the horrendous things I am told I may be accused of. While I have certainly made mistakes, this threat feels like a shakedown, and I will defend myself to the full extent of the law.

Mr. Rabois is a member of the storied PayPal mafia, having worked at both PayPal and LinkedIn prior to Square. Mr. Rabois’ active Twitter account yesterday betrayed no signs that anything was amiss. He thanking several followers for congratulating him on moving on from Square.

“I deeply regret that I let my personal and professional lives to become intertwined,” Mr. Rabois wrote on his Tumblr. “I apologize to my colleagues and friends (at Square and elsewhere) who I’ve let down, and who will bear the brunt of some of the unnecessary, negative attention this situation will likely bring.”

Update (5:26 p.m.): Gawker’s Adrian Chen points out on Twitter that as a first-year law student at Stanford in the early-1990s, Mr. Rabois was involved in an incident in which Mr. Rabois and two other students “shouted homophobic slurs in the direction of a lecturer’s home.” A New Yorker profile on PayPal founder Peter Thiel, who met Mr. Rabois at Stanford, described the incident as a law student’s attempt to test the limits of the First Amendment.

Follow Jessica Roy on Twitter or via RSS. jroy@observer.com