The Justice Department has opened a criminal investigation into Deal, a human resources and payroll startup, for allegedly hiring corporate spies to leak information about its biggest rival, Rippling, the Wall Street Journal reported.
In an emailed statement to TechCrunch, Deal said: “We are not aware of any investigation. We will always cooperate with relevant authorities and provide any necessary information in response to valid inquiries.”
Diehl’s statement then makes its own case against Rippling. The company pointed to its own lawsuit alleging that competitors are waging a “smear campaign” and claims it has an advantage over its competitors in the market, adding that “the truth will prevail in court.” Rippling declined to comment.
This is probably the biggest drama ever between two HR startups.
To recap, Rippling sued Diehl in May and amended its suit in June, accusing its rival of corporate espionage. A Rippling employee was caught in a sting and confessed in an Irish courtroom in a Hollywood-style affidavit to being a spy for Deal. The employee testified that he obtained everything he asked for, including Rippling sales leads, product roadmaps, customer account information, and the names of superstar employees, and passed it on to deal executives.
Rippling’s lawsuit is ongoing and charges it with violating federal racketeering laws (known as RICO and commonly used against organized crime), among other laws cited by its competitors. However, despite the use of language such as “criminal organization,” this is a civil lawsuit, not a criminal prosecution.
Mr. Diehl filed a countersuit against Rippling, alleging espionage by impersonating a customer.
tech crunch event
san francisco
|
October 13-15, 2026
spies lived in fear
According to the man’s cooperation agreement, which was released in court documents and reviewed by TechCrunch, the man who confessed to spying agreed to testify in Rippling’s case, and Rippling agreed to pay his legal fees and travel expenses. Deal now calls the man Rippling’s “paid witness.”
But the man also returned to court claiming his family was living in fear because he believed Deal’s men were after him. Deal’s lawyer initially denied this, but it was later revealed that Deal had hired a monitor.
payments to spies
Rippling recorded its most recent win at the end of November when it obtained Bank Records. Records show that Mr. Deal transferred the funds to an account held by the wife of Deal’s COO, and 56 seconds later transferred the same amount from that account to an account held by the confessed spy.
Meanwhile, separate court documents show that Deal founder and CEO Alexandre Bouaz, who has been described as the “mastermind” of the espionage scheme in the Rippling case, has hired a skilled lawyer, William Frentzen, to represent him. Mr. Frentzen is a partner in Morrison Foerster’s white-collar defense practice and previously served as head of the corporate and securities fraud unit in the U.S. Attorney’s Office for the Northern District of California.
Rippling’s attorney is none other than Alex Spiro of the white shoe law firm Quinn Emanuel. Spiro is a former Manhattan District Attorney known for his large personality and extensive celebrity client list, from Elon Musk to Jay-Z.
In other words, it all sounds like the plot of a John Grisham novel with Suits sprinkled on top.
None of these circumstances prevented investors from backing Deal and Rippling. Deal announced in October that it had raised $300 million led by Rivit Capital and Andreessen Horowitz, giving it a valuation of $17.3 billion. Rippling reached a valuation of $16.8 billion in May after raising $450 million from investors including Elad Gil, Goldman Sachs Alternatives and Y Combinator.
