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

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

#61

Post by FireBeyond »

curiousObject wrote: post #30
mothballed wrote: post #4

Earlier quoted context omitted.

Not to justify it, but why isn't the founder of UPS (edit: Fedex) in prison? I don't think it was legal to go and literally spend their money at the casino. If you turn a profit no one cares (unless you're Shkreli, don't think his investors lost money, but he pissed off some politicians because he said the quiet parts out loud about how the pharma industry works), if you lose it's fraud. When all the winners are doin…

why isn't the founder of UPS in prison? I don't think it was legal to go and literally spend their money at the casino That was FedEx’s founder, Fred Smith. It wasn’t UPS He only had $5,000 of funds remaining, which he gambled playing blackjack, so the potential loss to investors was small. He’d already lost almost all their investments through operating FeDex

The investors?

At that point he had been stiffing his pilots on wages for weeks or months, and with many also paying fuel bills on their personal credit cards/checks, since many fuelers had canceled FedEx's accounts.

Yeah, $5K isn't a whole lot, but if I'm a pilot struggling to put food on my family's table, and the CEO takes company money to Vegas, I'm not thinking "Oh, but the investors" or "Sure, it's not that much money anyway".

I don't see why people (not saying you, in particular) see this as some heroic founder "risking it all". He wasn't. He was risking the company's "all", after asking the employees to suck up his mismanagement.

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

#62

Post by Aurornis »

whimsicalism wrote: post #33

> In seeking a 12-year prison sentence for Javice, prosecutors cited a 2022 text Javice sent to a colleague in which she called it “ridiculous” that Holmes got over 11 years in prison. This seems utterly irrelevant to the sentencing, but what do I know.

Sentencing can be impacted by several factors like this. If the criminal shows a blatant disregard for the law and views lawbreaking as a risk-reward tradeoff to get what they want, they're more likely to commit crimes in the future.

If there had been more evidence that she reluctantly went with the scheme under desperation or pressure and held immense regret and remorse, in theory that would suggest a shorter sentence.

If I recall correctly, Elizabeth Holmes' lawyers tried to push the angle that she was pressured into committing the frauds as a way to lower the temperature of the case.

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

#63

Post by mothballed »

bryanlarsen wrote: post #55
mothballed wrote: post #42

Earlier quoted context omitted.

Shkreli is the only one of those 3 that fully paid back his investors, and it took him pissing off virtually every politician and a bunch of wealthy insurance executives/administrators to get enough resources mobilized to get a conviction (and being one of the most uncharismatic people on earth, which didn't help him at trial). I think you are definitely in a much worse place for a fraud conviction if you lose money.

News stories said SBF investors were going to get 118% of their money back. Did that not happen? https://techcrunch.com/2024/05/08/ftx-crypto-fraud-victims-t...

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 you bragging the value went up because I have a larger quantity as measured in Venezuelan Bolivars. What actually happened is their % they recouped was less than 100 until you artificially change to an entirely different currency.

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

#64

Post by ajross »

randycupertino wrote: post #19

My favorite thing about this case is how she bragged to her lead engineer she wouldn't go to prison, "“Don’t worry — I don’t want to end up in an orange jumpsuit" when she was trying to convince the engineer to fabricate their user data. From the complaint: > In particular, CC-1 and JAVICE asked Engineer-1 to supplement a list of Frank’s website visitors with additional data fields containing synthetic data. > Engine…

> she bragged to her lead engineer she wouldn't go to prison

So... obviously she was wrong. But the line between "just cutting a few corners" and prosecutable criminality isn't nearly as bright as we in the peanut gallery like to think. Lots of very successful startup launches (Uber and AirBnB are famous examples) were kinda/sorta/prettymuch illegal by the plain language of the laws they were (not) operating under. And they got stinking rich! PG himself has an example in one of the very early essays about how Viaweb kinda just skipped most of the early bureaucracy and accounting they were supposed to have been doing, figuring it would all just work out. And it did.

Kids see those examples and figure that a little cheating here or there probably isn't going to send them to jail. And it usually doesn't. Except when it does. And the distinction, for a lot of people in this community and right here on this forum, is very much a "There but for the grace of God go I" phenomenon.

Startup culture tells you to cheat, basically. Knowing how not to cheat isn't in the instruction manual.

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

#66

Post by curiousObject »

FireBeyond wrote: post #61
curiousObject wrote: post #30

Earlier quoted context omitted.

why isn't the founder of UPS in prison? I don't think it was legal to go and literally spend their money at the casino That was FedEx’s founder, Fred Smith. It wasn’t UPS He only had $5,000 of funds remaining, which he gambled playing blackjack, so the potential loss to investors was small. He’d already lost almost all their investments through operating FeDex

The investors? At that point he had been stiffing his pilots on wages for weeks or months, and with many also paying fuel bills on their personal credit cards/checks, since many fuelers had canceled FedEx's accounts. Yeah, $5K isn't a whole lot, but if I'm a pilot struggling to put food on my family's table, and the CEO takes company money to Vegas, I'm not thinking "Oh, but the investors" or "Sure, it's not that muc…

some heroic founder "risking it all". He wasn't. He was risking the company's "all", after asking the employees to suck up his mismanagement.

I agree. He was asking employees not to cash their paychecks sometimes. $5000 is inconsequential compared to that forced investment from employees and business partners

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

#67

Post by giancarlostoro »

ajross wrote: post #64
randycupertino wrote: post #19

My favorite thing about this case is how she bragged to her lead engineer she wouldn't go to prison, "“Don’t worry — I don’t want to end up in an orange jumpsuit" when she was trying to convince the engineer to fabricate their user data. From the complaint: > In particular, CC-1 and JAVICE asked Engineer-1 to supplement a list of Frank’s website visitors with additional data fields containing synthetic data. > Engine…

> she bragged to her lead engineer she wouldn't go to prison So... obviously she was wrong. But the line between "just cutting a few corners" and prosecutable criminality isn't nearly as bright as we in the peanut gallery like to think. Lots of very successful startup launches (Uber and AirBnB are famous examples) were kinda/sorta/prettymuch illegal by the plain language of the laws they were (not) operating under. A…

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?

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

#68

Post by FireBeyond »

mothballed wrote: post #27
potato3732842 wrote: post #20

Earlier quoted context omitted.

> (unless you're Shkreli, don't think his investors lost money, but he pissed off some politicians because he said the quiet parts out loud about how the pharma industry works) What's the TL;DR? His wikipedia page doesn't make it obvious.

Shkreli's schtick was to buy out or control pharma companies that had a monopoly and jack the everliving fuck out of the prices. He had some programs for uninsured people, but he would milk the insurance companies absolutely dry, which gave him some wild profits. This made a bunch of powerful people absolutely enraged, as he was basically publicly bragging about jacking the ever living fuck out of the prices. Pharma…

This is a really weird spin on Shkreli's antics.

He would paint himself as a working man's hero, "I'm making insurers pay more so you can get your drugs cheaper", always avoiding the awkward questions of where the insurer's money came from and why premiums kept rising (note that I'm also not siding with insurers here, especially those who have implemented PBMs to leech money into their pockets). He basically treated the public as useful idiots who thought that insurance was paying more for their drugs out of ... charity? Goodwill? The money fairy?

Then there was also the fact that at least once (and to a slightly lesser extent, twice), he went to the FDA to block the approval of a new drug, arguing it shouldn't be on the market. Why?

Not because it was less effective than the market options - it had better results.

Not because it had more/worse side effects, complications and interactions - it had better results there too.

Not because it was prohibitive, or patenting or anything stifling to the market.

No, it was because Shkreli had recently purchased a manufacturer of one of those existing drugs and their portfolio, and had been in the process of ramping up his price gouging on that drug, i.e. "The FDA should block approval of this better drug because it limits my ability to profit from my 'worse' drug."

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

#69

Post by Aurornis »

ajross wrote: post #64
randycupertino wrote: post #19

My favorite thing about this case is how she bragged to her lead engineer she wouldn't go to prison, "“Don’t worry — I don’t want to end up in an orange jumpsuit" when she was trying to convince the engineer to fabricate their user data. From the complaint: > In particular, CC-1 and JAVICE asked Engineer-1 to supplement a list of Frank’s website visitors with additional data fields containing synthetic data. > Engine…

> she bragged to her lead engineer she wouldn't go to prison So... obviously she was wrong. But the line between "just cutting a few corners" and prosecutable criminality isn't nearly as bright as we in the peanut gallery like to think. Lots of very successful startup launches (Uber and AirBnB are famous examples) were kinda/sorta/prettymuch illegal by the plain language of the laws they were (not) operating under. A…

Not really the same thing.

Material misrepresentation of a business is blatant financial fraud.

If you sell someone a yellow-painted piece of metal but you tell them it's solid gold, you're not bending the rules a little bit. You're just defrauding them.

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

#70

Post by mothballed »

notmyjob wrote: post #56
mothballed wrote: post #27

Earlier quoted context omitted.

Shkreli's schtick was to buy out or control pharma companies that had a monopoly and jack the everliving fuck out of the prices. He had some programs for uninsured people, but he would milk the insurance companies absolutely dry, which gave him some wild profits. This made a bunch of powerful people absolutely enraged, as he was basically publicly bragging about jacking the ever living fuck out of the prices. Pharma…

Victims not wanting prosecution doesn’t absolve the perpetrator as wife beaters learn all the time. I also think Skhreli’s biggest mistake was threatening Hillary Clinton.

If a wife says at trial she wasn't beat, it's extremely likely you're getting a conviction. I'm aware of a recent high profile case (Mike Glover) where the partner even had signs of broken bones and a beaten down door and the partner just later changed her story to those being due to a recreational accident outdoors and that pretty much terminated the case between that and her not providing a favorable testimony. But that's aside the point.

In this case the wife never called the cops, and then when the cops showed up she claimed she wasn't beat, and not only that she has no visible marks or bruises or anything.

And none of this is justifying any of it. Just showing how far outside of what we commonly see in fraud cases that actually get convicted.

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