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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

#81

Post by code4tee »

Aurornis wrote: post #45
firefoxd wrote: post #24

At an investor event, a desperate journalist was running around the room asking people their age. He ended up at our table, with a drink in hand, and a defeated look on his face. He had given up. We talked a bit, and he asked me, "are you under 30?" I answered "No. But this guy is." I pointed at the 28 year old cofounder of the start up I was part off. Before the evening was over, my colleague made it to the list of…

The people I know who made the 30 under 30 list approached it like a massive campaign they had to win. It was a full-court press to get in front of the right people and their startup's PR releases were all timed to impress for the 30 under 30 during that period. Maybe times changed since it became more of a running joke. At one point it was a selling point for fundraising that people would compete hard over.

Every person I personally know on this list made it their life mission to be on the list. It was lost on them that the whole thing has become a running joke that everyone else thinks is just full of grifters.

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

#82

Post by paxys »

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…

The takeaway here is that you can defraud people and you can defraud the state, and will likely get away with it with a slap on the wrist (unless you steal a crazy big amount like FTX did). If you defraud rich and powerful investors, well that's a different story.

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

#83

Post by brandall10 »

TuringNYC wrote: post #80
brandall10 wrote: post #76

Earlier quoted context omitted.

The problem here is this wasn’t about MAU. JPMorgan wanted a verified student data asset they could market to, so stale accounts were fine. Diligence focused on whether Frank had “records” (name, email, DOB, etc.), not whether those records were active. Beyond that, JPMorgan didn’t want to push too hard and risk blowing up the deal as there was competitive pressure. Calling out “these numbers seem odd” could have spo…

>> The problem here is this wasn’t about MAU. JPMorgan wanted a verified student data asset they could market to, so stale accounts were fine. Diligence focused on whether Frank had “records” (name, email, DOB, etc.), not whether those records were active. This isnt about inactive data, they had an outside data scientist create an artificially generated usage dataset!

That's not what I said.

JPMorgan thought they were getting legitimate users of the product at some point in time - they didn't care whether or not they were currently active, hence vetting ops didn't really matter much.

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

#84

Post by mothballed »

FireBeyond wrote: post #68
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…

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…

Regardless on your take about his antics, it seems clear the fraud prosecution had a lot more to do with his pharma antics than the government actually caring that much about how he paid back investors at prior companies, especially since to my knowledge none of his investors were going to the government with complaints. No one gave a shit about the guy until his (seemingly legal) pharma 'gouging' practices pissed off a huge segment of influential people.

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

#85

Post by giancarlostoro »

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…

Did they sue for damages? JP Morgan did not waste time.

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

#86

Post by red_rech »

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…

[dead]

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

#87

Post by bryanlarsen »

Aurornis wrote: post #69
ajross wrote: post #64

Earlier quoted context omitted.

> 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.

classic article: Everything Everywhere is Securities Fraud. https://www.bloomberg.com/opinion/articles/2019-06-26/everyt...

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

#88

Post by Aurornis »

NickC25 wrote: post #78
Aurornis wrote: post #53

Earlier quoted context omitted.

> It's interesting how nobody talks about due-diligence being completely broken. The majority of the talk around this case has been about the due diligence failures. The judge even called it out. Consumer businesses are harder to vet. It's not like a B2B with a dozen top customers where you can call them all and confirm that sales are happening. Non-response and customer churn is expected to be a high and changing nu…

>From what I read she also invoked various privacy law excuses to give them the run-around while they were pressured to close the deal. And that should have been a massive red flag for JPMC. They should have nope'd out of that deal on the spot. I run a hybrid B2B and B2C consumer packaged good company. I have a few small investors. They know who my top clients are, because they ask in good faith, and I answer in good…

> I run a hybrid B2B and B2C consumer packaged good company. I have a few small investors. They know who my top clients are, because they ask in good faith, and I answer in good faith.

Right, because it's easy to share your customer list when you have a small number of customers and they are repeat customers.

Her company helped with student loans. Her customers were mostly one-time customers. The customer count was supposed to be indicative of how many new college students they could expect to sign up each year.

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

#89

Post by bryanlarsen »

mothballed wrote: post #63
bryanlarsen wrote: post #55

Earlier quoted context omitted.

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…

Sure, if you believe crypto is a currency.

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

#90

Post by paxys »

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…

What was the fraud? Limo services were always allowed in NYC, and didn't have to abide by the medallion system. All Uber did was make it more efficient to find and book a Limo.
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