On the other side of the door, Shaikh's wife could hear him stuttering, the way he did when he got emotional or nervous.
The agents began asking Shaikh about buying and selling websites with the teenager. They asked him about a site called e.tv. It had been stolen, they said. They asked Shaikh if he knew anything about the sale of that site. Shaikh wouldn't say. Then they showed him documentation that the money for the sale, about $18,000, had been transferred online using Shaikh's IP address.
"That puts me in a very negative light," Shaikh said, according to the FBI report. "Where do we go from here?" He asked the agents if they knew of any "FBI-friendly attorneys."
Suddenly, Shaikh's wife burst into the room, speaking to him in Urdu. She had thought they were cooperating with the FBI—and this was turning into a full-blown interrogation. "Khalid, let's go," she said. When he argued with her, she lost her patience.
"Why can't I pull you out of the room?" she said. "Is he gonna arrest us? What's going to happen?" Shaikh agreed to leave, and the agents let them go.
The couple hired a criminal defense attorney and prepared for the worst. About a week after Shaikh's wife gave birth to a girl, their lawyer received discovery documents that included FBI reports. Shaikh had said enough during that meeting to give the FBI plenty of evidence to work with. And there was another chunk of evidence on a CD, clipped to the discovery pack. When Shaikh's wife opened the audio files, she could hear herself and her husband, chatting with Mahler over green curry and basil chicken. Mahler had worn a wire.
On October 28, 2009, Shaikh was indicted on four counts of computer fraud for attacking YouSendIt's servers. He was released on a $100,000 unsecured bond. In June 2011, he pleaded guilty to the first count, a felony, for the cyberattack that took place in December 2008. (No one was ever charged with stealing e.tv.) Shaikh agreed to pay $48,194 in restitution to YouSendIt. His sentencing hearing is scheduled for April 30, 2012. The sentencing guidelines recommend six to 12 months of imprisonment, but under the terms of the plea agreement, that may be reduced to house arrest. Whether or not he serves jail time, it's unclear how much longer Shaikh will be allowed to stay in this country. Though his wife is a U.S. citizen, Shaikh is here on a temporary work visa. He applied for permanent residency in 2009 but was denied. "This kind of conduct comes under great scrutiny with the government," says Michael Wildes, a partner at Wildes & Weinberg, which specializes in immigration law.
Since Shaikh's arraignment, contract work has been harder to get, especially at companies that do background checks. His recent resumé states that he is willing to relocate without expenses. Since June, Shaikh has been living in Colorado—a company there hired him to write code for a set of home monitoring gadgets. His wife and daughter remain in California. Shaikh is clean-shaven now, and he has gained some weight. He has given up the flashy suits and the T-shirts in favor of unassuming slacks, a blazer, and a polo shirt.
Every weekday, Shaikh drives his muddy Honda Insight hybrid from the desolate Motel 6 to a low-slung office building 9 miles away. Shaikh says he distrusts his one-year employment contract, so he refuses to lease an apartment. The Motel 6 may be wedged between a six-lane thoroughfare and a Walmart, but it carries no contractual obligations. Shaikh controls whether he stays or leaves.
Other sorts of contracts—a mortgage, credit card agreements, car loans and leases—have stacked up against Shaikh over the past few years. An October 2011 presentencing report estimated he and his wife have more than $263,000 in combined debts, contributing to expenses of about $9,000 a month. That's before legal fees related to his court case—and the money he must pay YouSendIt. In Shaikh's mind, the Series A contract, which caused him to lose control of YouSendIt, was the one that led to his downfall. That's what started the battle he ultimately lost.
Shaikh still doesn't understand why knocking YouSendIt offline for a few hours overshadows everything he did for the company. "Why don't they talk about when it was a top 600 website in the world, when I was doing everything to run it?" he asks. "Millions of dollars later, I do something so small, and it's a big deal?" In Shaikh's view, he just chose an improper method of expressing himself. "I vented through technology," he says. "Obviously, this was the wrong way to vent."
Alone in Colorado with his thoughts, Shaikh often spends his off-hours wandering through a local mall. "People are very kind here," he says. Sometimes his thoughts drift back to when he and some friends hacked together YouSendIt, when it was a simple site that made enough money to pay the bills, when there were no investors, no lawyers. "Once you break even, to me, that's the best point," he says, "because at that point, you have complete control over your own life." Still, Shaikh's not sure he will ever launch another business.
Shaikh remains close with his brother, Amir, who now runs InRCom, a small marketing company in New Jersey. But their old colleagues seem worlds away. YouSendIt, still under the management of Ivan Koon, exceeded $24 million in sales in 2010, up some 2,500 percent since Shaikh left the company. YouSendIt made the Inc. 500 in 2010.
In early 2011, Kumaran left YouSendIt to launch PunchTab, a company that designs software for customer loyalty programs. (Kumaran remains on YouSendIt's board.) In November, PunchTab received $4.4 million in funding from some of YouSendIt's early investors.
"Outsiders get sold this vision that you start a company, get funding, and you're set for life," says Kumaran during an interview in Palo Alto, near the PunchTab offices. "I'm Exhibit A, a very old 36-year-old"—he points to his gray hairs—"that it's a lot tougher than that."
These days, Kumaran speaks in the press about "lessons learned." He even penned a Forbes.com article in January. First bullet point: "Early stage investors back you, not your company." He never mentions either of the Shaikh brothers.
