19 ms·

This is a bit of a click-baity article title. He went broke because he assumed he was getting a payout and did stupid things. From the bottom of article: Earl

This is a bit of a click-baity article title. He went broke because he assumed he was getting a payout and did stupid things. From the bottom of article: Early in the Life Partners saga, Mr. McPherson was so beguiled by the lure of whistleblower millions that he essentially quit his day job to become a full-time whistleblower, using his accounting and life-insurance knowledge to spot potential miscreants...In 2018, he took out a $1 million litigation-funding loan at very high interest rates, secured by the Life Partners whistleblower claims, to pay back taxes and continue to pursue his cases.

yellow_lead 5y ago
You would think that if he were so invested in the whistleblower program he would do his due diligence to understand the fine print.
- matthewdgreen 5y ago
  The fine print seems to be that the bankruptcy process privileges investors, rather than requiring companies to pay fines (which pay for the whistleblower program.) I don't know if this is good or bad, but it's the important substance of the article -- not the silly detail about this particular person's finances.
  - cortesoft 5y ago
    Well the crime the company committed was fraud against their investors... shouldn't the victims get their money back? Paying out the whistleblower before the victims would be like if someone stole your bike, then the cops arrest the guy and recover your bike because of a tip... and then the cops give your bike to the guy who called in the tip
    - HarryHirsch 5y ago
      It's all about the incentives. You have to decide what you want, a criminogenic environment or fairness.
    - fsckboy 5y ago
      wow, that would be like having a bounty program that paid whistleblowers 10% of value of the theft for encouragement and was catching enough perps to act as a deterrent and lowered the overall crime rate and got victims 90% of their losses back, kind of an ex post insurance pool... ...and then figuring you could get victims 100% of their losses back by taking that 10% from the whistleblowers and sending them to the back of the line, and then coming back a year later and seeing that... ...while victims were getting 100% of their losses back when these crimes were discovered, very few of these crimes were being discovered, and using your impeccable logic concluding that the crime rate must have gone down! who needs whistleblowers!?
      - deleted 5y ago
        [deleted]
      - rsj_hn 5y ago
        > and got victims 90% of their losses back We do not have a justice system in which the victim pays for the cost of investigating, prosecuting, and punishing offenders. All of that is paid by the general public. That does not mean there are no bounties -- there are, but the bounties are never paid by subtracting out amounts due victims. Changing that, so that victims would not be entitled to full restitution in order to help finance law enforcement would require changing a lot of laws, not just adding a whistleblower law. It would also overturn a lot of precedent. It would be a big change that a large majority of the public would oppose.
        fsckboy 5y ago
        > that a large majority of the public would oppose source?
    - dbuder 5y ago
      Against their investors or on their investors behalf? And either way, it is the investors who could (supposedly) bring an end to it.
    - pessimizer 5y ago
      Not having a whistleblower would be like if someone stole your bike, got away with it, then went on to have a long, successful career in stealing bikes. The crime has already been committed. The whistleblower is the reason you're getting anything back.
    - deleted 5y ago
      [deleted]
gowld 5y ago
This is Y Combinator's Hacker News. Investing in a new business is not "stupid things". Taking out a personal loan instead of using an LLC is "stupid things".
- _e 5y ago
  Even if the loan was taken out under a LLC, lenders would require a personal guarantee for a new and unproven venture.
newacct583 5y ago
That's a "he was no angel" argument, and like all such it's really an attempt to deflect. The reason to reward whistleblowers isn't to make sure the money goes to Objectively Good and Unimpeachably Moral individuals, it's to incentivize enforcement of laws and norms. The guy could be a raging narcissist with a gambling problem (which would be quite a bit worse than trying to be a "full-time whistleblower") and we would STILL want him to blow the whistle on wrongdoing he witnesses, right?
bombcar 5y ago
Eggs were counted before they hatched. News at 11.
- Rapzid 5y ago
  Chickens.
modeless 5y ago
> he essentially quit his day job to become a full-time whistleblower It sounds like you're criticizing him here, but this is a good thing, right? We incentivize whistleblowing because we want more whistleblowing. He was successful in bringing frauds to justice. We got exactly what we wanted. This is exactly how it should work. > 2018, he took out a $1 million litigation-funding loan at very high interest rates, secured by the Life Partners whistleblower claims This isn't necessarily stupid either. If it was a secured loan, then as I understand it he probably won't have to pay the million back. He transferred the risk to the lender and they lost. He paid his back taxes and should emerge from bankruptcy without the debt.
- TheRealPomax 5y ago
  Not if you turn it into a career, no. Then you should have signed up for an undercover investigator position, drawing a normal salary, instead of assuming your reporting will net you an income. Should whistleblowers be rewarded? Absolutely. Should that come from a pool allocated and managed by the SEC? Most certainly, because we want folks to be secure in their whistleblowing. Is it the American way to go "there's money here, I can probably take repeat-advantage of that"? You bet your star spangled butt it is. But is that last part also on you, and not anyone else? In most American fashion: boy howdy yes.
  - modeless 5y ago
    > Then you should have signed up for an undercover investigator position Why though? Is this a moral judgement against whistleblowing as a profession, or something? I expect that offering whistleblower rewards is a much more scalable and effective way to discover frauds than employing a standing army of investigators.
    - fastball 5y ago
      The problem here is that he leveraged himself and pursued a case which resulted in bankruptcy which makes it hard for the SEC to collect a fine that they can disburse part of to the whistleblower. Whistleblower rewards are great, but they must have limits, and he bumped into them here (while highly leveraging himself).
hammock 5y ago
>This is a bit of a click-baity article title. He went broke because he assumed he was getting a payout and did stupid things. Is that something different than what the title says?

yellow_lead 5y ago

You would think that if he were so invested in the whistleblower program he would do his due diligence to understand the fine print.

matthewdgreen 5y ago
The fine print seems to be that the bankruptcy process privileges investors, rather than requiring companies to pay fines (which pay for the whistleblower program.) I don't know if this is good or bad, but it's the important substance of the article -- not the silly detail about this particular person's finances.
- cortesoft 5y ago
  Well the crime the company committed was fraud against their investors... shouldn't the victims get their money back? Paying out the whistleblower before the victims would be like if someone stole your bike, then the cops arrest the guy and recover your bike because of a tip... and then the cops give your bike to the guy who called in the tip
  - HarryHirsch 5y ago
    It's all about the incentives. You have to decide what you want, a criminogenic environment or fairness.
  - fsckboy 5y ago
    wow, that would be like having a bounty program that paid whistleblowers 10% of value of the theft for encouragement and was catching enough perps to act as a deterrent and lowered the overall crime rate and got victims 90% of their losses back, kind of an ex post insurance pool... ...and then figuring you could get victims 100% of their losses back by taking that 10% from the whistleblowers and sending them to the back of the line, and then coming back a year later and seeing that... ...while victims were getting 100% of their losses back when these crimes were discovered, very few of these crimes were being discovered, and using your impeccable logic concluding that the crime rate must have gone down! who needs whistleblowers!?
    - deleted 5y ago
      [deleted]
    - rsj_hn 5y ago
      > and got victims 90% of their losses back We do not have a justice system in which the victim pays for the cost of investigating, prosecuting, and punishing offenders. All of that is paid by the general public. That does not mean there are no bounties -- there are, but the bounties are never paid by subtracting out amounts due victims. Changing that, so that victims would not be entitled to full restitution in order to help finance law enforcement would require changing a lot of laws, not just adding a whistleblower law. It would also overturn a lot of precedent. It would be a big change that a large majority of the public would oppose.
      - fsckboy 5y ago
        > that a large majority of the public would oppose source?
  - dbuder 5y ago
    Against their investors or on their investors behalf? And either way, it is the investors who could (supposedly) bring an end to it.
  - pessimizer 5y ago
    Not having a whistleblower would be like if someone stole your bike, got away with it, then went on to have a long, successful career in stealing bikes. The crime has already been committed. The whistleblower is the reason you're getting anything back.
  - deleted 5y ago
    [deleted]

gowld 5y ago

This is Y Combinator's Hacker News. Investing in a new business is not "stupid things". Taking out a personal loan instead of using an LLC is "stupid things".

_e 5y ago
Even if the loan was taken out under a LLC, lenders would require a personal guarantee for a new and unproven venture.

newacct583 5y ago

That's a "he was no angel" argument, and like all such it's really an attempt to deflect. The reason to reward whistleblowers isn't to make sure the money goes to Objectively Good and Unimpeachably Moral individuals, it's to incentivize enforcement of laws and norms. The guy could be a raging narcissist with a gambling problem (which would be quite a bit worse than trying to be a "full-time whistleblower") and we would STILL want him to blow the whistle on wrongdoing he witnesses, right?

bombcar 5y ago

Eggs were counted before they hatched. News at 11.

Rapzid 5y ago
Chickens.

modeless 5y ago

> he essentially quit his day job to become a full-time whistleblower It sounds like you're criticizing him here, but this is a good thing, right? We incentivize whistleblowing because we want more whistleblowing. He was successful in bringing frauds to justice. We got exactly what we wanted. This is exactly how it should work. > 2018, he took out a $1 million litigation-funding loan at very high interest rates, secured by the Life Partners whistleblower claims This isn't necessarily stupid either. If it was a secured loan, then as I understand it he probably won't have to pay the million back. He transferred the risk to the lender and they lost. He paid his back taxes and should emerge from bankruptcy without the debt.

TheRealPomax 5y ago
Not if you turn it into a career, no. Then you should have signed up for an undercover investigator position, drawing a normal salary, instead of assuming your reporting will net you an income. Should whistleblowers be rewarded? Absolutely. Should that come from a pool allocated and managed by the SEC? Most certainly, because we want folks to be secure in their whistleblowing. Is it the American way to go "there's money here, I can probably take repeat-advantage of that"? You bet your star spangled butt it is. But is that last part also on you, and not anyone else? In most American fashion: boy howdy yes.
- modeless 5y ago
  > Then you should have signed up for an undercover investigator position Why though? Is this a moral judgement against whistleblowing as a profession, or something? I expect that offering whistleblower rewards is a much more scalable and effective way to discover frauds than employing a standing army of investigators.
  - fastball 5y ago
    The problem here is that he leveraged himself and pursued a case which resulted in bankruptcy which makes it hard for the SEC to collect a fine that they can disburse part of to the whistleblower. Whistleblower rewards are great, but they must have limits, and he bumped into them here (while highly leveraging himself).

hammock 5y ago

>This is a bit of a click-baity article title. He went broke because he assumed he was getting a payout and did stupid things. Is that something different than what the title says?