4 ms·

They perpetuated a fraud by selling something that doesn't exist. They might have invited criminal punishment and personal tort liability.

by jilop 8y ago

lisper 8y ago
> They perpetuated a fraud by selling something that doesn't exist. It's only fraud if they misrepresented the fact that it didn't yet exist, which seems very unlikely. Buying things that don't yet exist happens all the time. Thousands of people put down deposits on Tesla Model 3's that did not then exist. People regularly buy houses under construction, and people often lose money when the contractor fails to deliver. It happens all the time.
- shakna 8y ago
  They (Xcor) also asserted that 35% of the ticket price would be held in 3rd party escrow for such an eventuality, which the 3rd party now asserts is not correct. That is very likely to be fraud.
  - lisper 8y ago
    Yes, that's true. But good luck recovering damages from a bankrupt defendant.
    - shakna 8y ago
      I know the US is different and strange, in that a corporation is a person... ... But where I am, bankruptcy only lasts 3 years + 1 day, after which point, those that had shares within the entity that has failed, or the part-owners, will be required to begin paying back their debts. Bankruptcy is not a failsafe to prevent you paying all debts. It's just a timeout to give you time to be in a position to pay those debts. And yes, it can be declared multiple times, but it won't always be accepted.
      - EGreg 8y ago
        What is the point of that, if the money invested is vastly more than what the owner can earn? The USA having bankruptcy protections is what helps foster this level of risk and entrepreneurship here.
        shakna 8y ago
        It's not investments that need to get paid back - it's contracts, or rather the value of the contract. In this case, Xcor would need to pay back the fees they said would go to escrow. Not any investor who took equity on the gamble it would be worth something.
        toast0 8y ago
        Where is Xcor supposed to get this money? They lost their revenue source, laid off all their employees, and any property they have is presumably not nearly enough to satisfy their debt. The business is almost certain to close pending the resolution of the bankruptcy. Certainly, if people were promised that there was money in escrow and it wasn't, that sounds like fraud, but that doesn't mean those who perpetuated the fraud have the money either.
      - _cs2017_ 8y ago
        Wherever you live, there are likely companies with limited liability of the owners. In the US they are corporations or LLCs or limited partnerships. In your country they may be named differently. See https://en.m.wikipedia.org/wiki/Limited_company https://en.m.wikipedia.org/wiki/Limited_company. When such a company runs out of money, nobody else will be required to come up with cash to pay its debts. You don't need to read the bankruptcy laws to verify that, it's just the definition of a limited liability.
    - chimeracoder 8y ago
      > Yes, that's true. But good luck recovering damages from a bankrupt defendant. Fraud can pierce the veil, so it's not just the company that they can go after, but also anyone responsible for the fraud.
    - garmaine 8y ago
      That’s why it is in escrow.
- olalonde 8y ago
  > It's only fraud if they misrepresented the fact that it didn't yet exist, which seems very unlikely. I don't know the details of the situation but fraud happens all the time as well and without having more information, I wouldn't discount it as a possibility.
- ams6110 8y ago
  Any construction loan will include completion insurance. If you're putting cash down without that, you are assuming that risk yourself.
ilrwbwrkhv 8y ago
i mean.. planes sell tickets everyday for seats that don't exist.. its all legal...
- CydeWeys 8y ago
  And if you end up on one of those oversold seats you get all sorts of compensation for it, like [free rebooking or a full refund] plus additional money. Depending on how badly this messes up your travel schedule, you can be owed up to 600 Euros (in the EU) plus free rebooking. It's not at all the same situation as buying a "ticket" for a rocket that hasn't even been built yet; those funds are going to be spent on R&D with no guarantee of success, and you're never going to get your money back; the best case scenario is you get to take the trip.
pjungwir 8y ago
perpetrated

They perpetuated a fraud by selling something that doesn't exist. They might have invited criminal punishment and personal tort liability.

by jilop 8y ago

They perpetuated a fraud by selling something that doesn't exist. They might have invited criminal punishment and personal tort liability.

lisper 8y ago

> They perpetuated a fraud by selling something that doesn't exist. It's only fraud if they misrepresented the fact that it didn't yet exist, which seems very unlikely. Buying things that don't yet exist happens all the time. Thousands of people put down deposits on Tesla Model 3's that did not then exist. People regularly buy houses under construction, and people often lose money when the contractor fails to deliver. It happens all the time.

shakna 8y ago
They (Xcor) also asserted that 35% of the ticket price would be held in 3rd party escrow for such an eventuality, which the 3rd party now asserts is not correct. That is very likely to be fraud.
- lisper 8y ago
  Yes, that's true. But good luck recovering damages from a bankrupt defendant.
  - shakna 8y ago
    I know the US is different and strange, in that a corporation is a person... ... But where I am, bankruptcy only lasts 3 years + 1 day, after which point, those that had shares within the entity that has failed, or the part-owners, will be required to begin paying back their debts. Bankruptcy is not a failsafe to prevent you paying all debts. It's just a timeout to give you time to be in a position to pay those debts. And yes, it can be declared multiple times, but it won't always be accepted.
    - EGreg 8y ago
      What is the point of that, if the money invested is vastly more than what the owner can earn? The USA having bankruptcy protections is what helps foster this level of risk and entrepreneurship here.
      - shakna 8y ago
        It's not investments that need to get paid back - it's contracts, or rather the value of the contract. In this case, Xcor would need to pay back the fees they said would go to escrow. Not any investor who took equity on the gamble it would be worth something.
        toast0 8y ago
        Where is Xcor supposed to get this money? They lost their revenue source, laid off all their employees, and any property they have is presumably not nearly enough to satisfy their debt. The business is almost certain to close pending the resolution of the bankruptcy. Certainly, if people were promised that there was money in escrow and it wasn't, that sounds like fraud, but that doesn't mean those who perpetuated the fraud have the money either.
    - _cs2017_ 8y ago
      Wherever you live, there are likely companies with limited liability of the owners. In the US they are corporations or LLCs or limited partnerships. In your country they may be named differently. See https://en.m.wikipedia.org/wiki/Limited_company https://en.m.wikipedia.org/wiki/Limited_company. When such a company runs out of money, nobody else will be required to come up with cash to pay its debts. You don't need to read the bankruptcy laws to verify that, it's just the definition of a limited liability.
  - chimeracoder 8y ago
    > Yes, that's true. But good luck recovering damages from a bankrupt defendant. Fraud can pierce the veil, so it's not just the company that they can go after, but also anyone responsible for the fraud.
  - garmaine 8y ago
    That’s why it is in escrow.
olalonde 8y ago
> It's only fraud if they misrepresented the fact that it didn't yet exist, which seems very unlikely. I don't know the details of the situation but fraud happens all the time as well and without having more information, I wouldn't discount it as a possibility.
ams6110 8y ago
Any construction loan will include completion insurance. If you're putting cash down without that, you are assuming that risk yourself.

ilrwbwrkhv 8y ago

i mean.. planes sell tickets everyday for seats that don't exist.. its all legal...

CydeWeys 8y ago
And if you end up on one of those oversold seats you get all sorts of compensation for it, like [free rebooking or a full refund] plus additional money. Depending on how badly this messes up your travel schedule, you can be owed up to 600 Euros (in the EU) plus free rebooking. It's not at all the same situation as buying a "ticket" for a rocket that hasn't even been built yet; those funds are going to be spent on R&D with no guarantee of success, and you're never going to get your money back; the best case scenario is you get to take the trip.

pjungwir 8y ago

perpetrated