Firstwave's Lost Pay

Firstwave Secure Intelligent Optical Networks Inc. appears to have run into a rough patch. The company's Reston, Va., headquarters has closed, and several of its former employees are complaining they were never fully paid for their work.

First, some background: Firstwave was founded in February 2000 by two engineers from the Naval Research Laboratory (NRL). The startup was funded by Raza Foundries, but it's not clear how much Raza has put up to back the company.

According to Firstwave's Website, the company was building an "all-optical Dense Wavelength Division Multiplexing (DWDM) switching technology for next generation optical networks." The gear Firstwave was building was meant to be "deployed as a cost-effective... overlay network capable of attaining 2.5, 10, and 40 Gbit/s Ethernet networks over existing fiber optic lines."

In August 2002, the startup announced a five-year, $29 million research and development contract with (surprise!) the Naval Research Laboratory (see Firstwave Follows the Feds). At that time, the company said products had been at the NRL since September 2001 and had been carrying live traffic on the Advanced Technology Demonstration Network (ATDNet), a research network connecting NRL with other government offices, for six months.

A few months afterward, the plans began to unravel. Sometime in October, Firstwave ran low on funds, but apparently it never stopped its workers from punching the clock. "The board of directors allowed people to work for weeks without telling anyone that they didn't have the money to make payroll," says one former employee. "Folks weren't told until the end of the pay period that there would be no checks."

Sometime later, employees were furloughed without pay, though Firstwave kept paying their health benefits until the end of January.

The Virginia Department of Labor says it has received 22 claims against Firstwave for "non-payment of wages." Most of the cases are going to arbitration. Nine cases are currently open; eight of those are in the process of being closed because the claimants have agreed to work with Firstwave to settle their claims, the Labor Department says.

"The Firstwave offices in Reston, Va., are closed," a Labor Department spokesperson says.

According to the company's Web site, Firstwave's board includes John C. W. Taylor, the company's chairman and CEO; Atiq Raza, CEO of Raza Foundries; Gerald J. Butters, the former president of Lucent Technologies Inc.'s (NYSE: LU) Optical Networking Group; and Donald G. Basile, Firstwave's president and chief operating officer, who is also a managing director at Raza Foundries.

"FirstWave is a portfolio company in which RFI has an investment... RFI as a policy does not disclose information about the business or finances of any of the private companies in which it holds investments," writes Atiq Raza, in an email response to an inquiry about Firstwave.

Basile did not immediately return calls from Light Reading on Wednesday morning.

Emails and calls to employees at Firstwave's headquarters in Reston were not answered.

Light Reading has filed a Freedom of Information Act (FOIA) request with the Naval Research Laboratory in an attempt to shed light on details of the NRL's dealings with Firstwave. Per FOIA, the NRL has 20 business days (excluding Saturdays, Sundays, and legal holidays) to make its reply.

— Phil Harvey, Senior Editor, Light Reading
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joe_average 12/5/2012 | 12:39:22 AM
re: Firstwave's Lost Pay A posting worth reading regarding Raza's arrogance and incompetence as seen by other VCs can be found over at the Maple Optical Clothesline:


Go to post #76 by "vc_man". Some interesting perspectives! I especially liked the phrase "bubble VC". That seems to hit the nail on the head.
drone387 12/5/2012 | 12:39:21 AM
re: Firstwave's Lost Pay Besides Intruvert, any other RFI companies alive and kicking?

The castle must be over half buried in the bog by now.
optimight2002 12/5/2012 | 12:39:21 AM
re: Firstwave's Lost Pay None of his companies will and can be successful. He has zero idea about networking and communication. He blew loads of investor cash with the RFI experiment, now he has suckered more investors to invest in his DOA chip company. He went around saying Firstwave has a rich pipeline - where is it? Any VC worth his salt will not even give him a meeting. Even companies which he sold like VxTel to Intel generated nothing and he will never sell another one.
optomania 12/5/2012 | 12:39:20 AM
re: Firstwave's Lost Pay Don't be so sure. He convinced a new VC to put cash in the castle.
optomania 12/5/2012 | 12:39:20 AM
re: Firstwave's Lost Pay Rumor has it from Intruvert that Raza sold their position in Intruvert a while ago to feed its work force and its real estate commitments. Intruvert website has no board members from Raza. No wonder the company is alive and kicking.
daboyz 12/5/2012 | 12:39:17 AM
re: Firstwave's Lost Pay Phil,

You wrote a Great article, and essentially got all the facts correct. One question...no phone calls or follow-up on the NJ location? I believe there are close to 50 complaints to the NJ Department of Labor relating to missed pay from employees. Are the doors open in NJ? How about the VP's of the company? You should ask about what happened to the VP's versus the other employees.
manoflalambda 12/5/2012 | 12:39:13 AM
re: Firstwave's Lost Pay daboyz:
You wrote a Great article, and essentially got all the facts correct. One question...no phone calls or follow-up on the NJ location?

Everyone I know at the NJ location is on "furlough" as it were. No pay. Some still come into work. All seem to be looking elsewhere.

drone387 12/5/2012 | 12:39:13 AM
re: Firstwave's Lost Pay "He convinced a new VC to put cash in the castle."

Horrors! I hope he keeps the pictures in a *really* safe place. On the plus side, maybe Murali still has a yob.
zettabit 12/5/2012 | 12:39:12 AM
re: Firstwave's Lost Pay Dear Puerile Booby,

Yes you're right, California like its third world counterparts such as Zimbabwe, Burma, and Uzbekistan, is crawling with venture capitalists.

The only problem is that people in California are always late to VC meetings, given the congestion of horse-drawn carriages and the bad state of the dirt track on Sand Hill Road.

Your analogies are, as always, extremely profound and accurate.

Not get back downstairs, your mommy is calling you again.
BobbyMax 12/5/2012 | 12:39:12 AM
re: Firstwave's Lost Pay Raza had opened a lot of companies. Some even did not last six months. Raza had bagged over $150 million. Raja had been wasting a lot of money in useless companies. He even fonded an OC-768 company knowing full well that such does not have much needed. Subsequently, the company was closed. What a big waste of money.

Most of the Vcs do not have any capability and competence to read technical articles have become VCs. Many kids as young as 30 years old have become VCs. This behavior is particularly found in Calfornia which is more less like a third world country.
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