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Founder sentenced to seven years in prison for fraudulent sale to JPMorgan

cnn.com

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Re: Founder sentenced to seven years in prison for fraudulent sale to JPMorgan

#111

Post by pessimizer »

simonsarris wrote: post #99
jerf wrote: post #60

Earlier quoted context omitted.

The way that due diligence would have discovered this was not to take the list and start doing spot checks on it. The way due diligence should have found this is that it should have been written all over the financials. What do you mean you have 4 million customers and a support staff of 20? What do you mean you have 4 million customers but your revenue is {clearly too low}? What do you mean you have 4 million custom…

> What do you mean you have 4 million customers and a support staff of 20? Sure to the rest, but: Whatsapp had 55 employees and 450 million users when it was acquired. It's at least conceivable to tell a story (lie) that's two orders of magnitude smaller. (And the real number was "only" off by one zero.)

Whatsapp elaborately explained how it was doing this to the public, it was with a technology (Erlang/OTP) that had rarely been used before, and that technology had been designed for and very successful in an almost identically shaped context (telecom switches.)

Also, more obviously, people you knew were using it every day. 450M is different than 4M, and way different than 300K. If Whatsapp were lying and saying they had 4.5B users, I'd expect JP Morgan to catch that within a few hours, too.

Re: Founder sentenced to seven years in prison for fraudulent sale to JPMorgan

#112

Post by BobaFloutist »

bryanlarsen wrote: post #89
mothballed wrote: post #63

Earlier quoted context omitted.

No because the assets ('money') deposited to SBF were crypto, and you just gamified it by doing a currency exchange to USD while disingenuously failing to note that in that time the USD value of the crypto went up. If you want an accurate reflection, note how much of the crypto deposited went in, and then how much came back out after SBF lost it. This would be like me depositing USD, someone stealing some of it, then…

Sure, if you believe crypto is a currency.

Ok, I deposit stock shares, you lose 50% of them under the couch, but the stock price goes up 110% so when the government seizes and liquidates your assets I have slightly more cash than the original value of what I deposited. Did you lose me money?

Re: Founder sentenced to seven years in prison for fraudulent sale to JPMorgan

#113

Post by bix6 »

paxys wrote: post #105
bix6 wrote: post #101

Earlier quoted context omitted.

Not true. They get payment for order flow, spread capture, cash sweep, securities lending, etc.

None of which has anything to do with their AUM

Sure AUC what’s up with all the nitting sheesh!!!

Re: Founder sentenced to seven years in prison for fraudulent sale to JPMorgan

#114

Post by xmprt »

ajross wrote: post #73
giancarlostoro wrote: post #67

Earlier quoted context omitted.

I guess it all depends on how you're cheating. Are you defrauding others in your cheating? Or are you just bypassing bureaucracy like not having a Taxi service license?

Potato/potatoe. Existing taxi medallion holders were absolutely harmed by Uber. Existing licensed hotel operators were absolutely harmed by AirBnB. And we all celebrated that to great effect here. But it was breaking the rules. We just think THOSE rules were bad but THESE rules are good. Well, it's not our call to make, it's the prosecutors'. And you (yes, you personally) aren't nearly as insulated from this kind of…

> We just think THOSE rules were bad but THESE rules are good

That's kind of how society evolves isn't it? Rules are always changing and that's generally a good thing. Some rules are pretty set in stone throughout history - eg. murder and fraud are generally bad. Other rules around free speech, slavery, energy usage/production, social safety nets, etc., have changed for the better.

You could argue that Uber and Airbnb are worse but I think the fact that they've stuck around despite allegedly breaking rules means that most people prefer the new state of affairs that they resulted in. If something else comes up that breaks rules set by Uber and results in something better (eg. autonomous vehicles?) then I'm sure people will gravitate to that new thing as well.

Re: Founder sentenced to seven years in prison for fraudulent sale to JPMorgan

#115

Post by masfuerte »

geor9e wrote: post #94

I wonder what really happened here: "The judge said Javice had assembled a “very powerful list” of her charitable acts, which included organizing soup kitchens for the homeless when she was 7 years old and designing career programs for formerly incarcerated women." At least for all my classmates doing the college application process, claims like that were almost always wild exaggerations of what we really did.

It seems like the effect of these college requirements is to teach ambitious young Americans that the way to get ahead is to cheat.

Re: Founder sentenced to seven years in prison for fraudulent sale to JPMorgan

#116

Post by fsckboy »

ajross wrote: post #54
jlarocco wrote: post #14

Earlier quoted context omitted.

The article says the judge called them out for not doing enough due dilligence. The fact that they didn't do enough research doesn't mean it's okay to scam them, though.

Right, it doesn't change the direction of criminality. But nonetheless JPM is out that money regardless (maybe some will get clawed back, but probably most of it was spent). "I got scammed and the perp is going to jail" isn't a good excuse to tell your boss about you lost $175M, either. Lessons abound here. Slow down on the tech habit folks, especially if you're an investment bank and not a VC incubator.

>JPM is out that money regardless ... probably most of it was spent

an MBA entrepreneur who starts a business and sells it to you for $175 million through normal channels is not likely to spend the money. this wasn't a fund wiring scam.

Re: Founder sentenced to seven years in prison for fraudulent sale to JPMorgan

#117

Post by pinewurst »

tverbeure wrote: post #75
TuringNYC wrote: post #12

>> A prosecutor, Micah Fergenson, though, said JPMorgan “didn’t get a functioning business” in exchange for its investment. “They acquired a crime scene.” I do not understand how an acquisition this big got thru due diligence without noticing all the fake users. Anyone in corporate M&A know if it is normal to spend this much money without inspecting the goods? Seems like the most basic of OLAP queries and two days of…

Back in the nineties, Philips was days away from signing a licensing deal for a revolutionary video compression technology that compressed whole movies down to 8KB. The former Philips CTO was a strong believer. And then the inventor died and nothing ever came of it. To be a fly on the wall during due diligence meetings between Philips engineers and management. https://lowendbox.com/blog/the-man-who-was-paid-e113000-f…

Once upon a time, I was strenuously recruited by a startup with similar, if not quite as extreme, codec promises. When I understood that my job would be rigging demos while trying to realize the non-software founder’s “algorithm”, I pretty much had to fake my own death to escape them. Shudder…

Re: Founder sentenced to seven years in prison for fraudulent sale to JPMorgan

#119

Post by pessimizer »

vjvjvjvjghv wrote: post #18

[flagged]

No different than ozy.com's story, and Carlos Watson got the pardon. It helped that he was basically Powell-Jobs's pet (one of the owners of the Democratic Party), then kissed Trump's ass on top. His entire deal was making connections with rich white people who wanted a black friend to tell them they were not only good people, but the best people. Excellent work if you can get it.

I don't think you can start this charm offensive after the crime, though. The only person I've ever seen manage that is Rob Blagojevich.

As has been said, the value of standing under a huge tree is more the shade, not the fruit. Your rich friends may never do anything for you, they might only value your friendship because you're one of the few who have never asked them for anything. But, consistent with that, if somebody attacks you they'll defend you as hard as they defend their other possessions. That kind of armor enables you to pluck fruit from other trees.

Re: Founder sentenced to seven years in prison for fraudulent sale to JPMorgan

#120

Post by gruez »

TuringNYC wrote: post #72
brandall10 wrote: post #23

Earlier quoted context omitted.

She pushed back on any direct vetting of the list using privacy laws as a shield and JPMorgan didn't challenge it due to competitive pressure to get the deal done ASAP. Clearly, if only 10% of the list was real, it would be pretty easy to validate that with a small random sample.

You could also obfuscate all PII and just join the user table with the website clickstream table and notice that only 10% of the users had any associated clickstream.

Presumably JPM didn't have prod db access to run whatever queries they want, and had to ask for access. They also faked user tables. What makes you think they wouldn't have faked the user activity table as well?
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