4 ms·

I wonder if there are cases of large scams where the perpetrators are smart enough to avoid being caught. Not all criminals end-up behind bars. I suspect that

I wonder if there are cases of large scams where the perpetrators are smart enough to avoid being caught. Not all criminals end-up behind bars. I suspect that some scams can go unnoticed for long enough. I also suspect that scam opportunities are exploding.

sbarre 4y ago
Any kind of electronic gambling setup is amenable to insider scams. Keep it low-key, don't get greedy, and you can probably milk it forever.
linuxftw 4y ago
> perpetrators are smart enough to avoid being caught. IMO, many startups are scams on some level. VC A funds company X. VC A also funds company Y. Company Y 'decides' to use company X's hot new product and has a lofty enterprise license. This happens a few more times. Company X now has very large revenues, VC's friends at big-nation-bank decide it's time to IPO and cash out.
- joecasson 4y ago
  I wish a VC's recommendation or direction was all it took to get a deal done. Getting a "lofty Enterprise license" through procurement is so much harder than you are stating. They can make an introduction, sure, but very few VCs are micromanaging to the point of determining a portfolio company's tech stack. Source: a decade of VC funded Enterprise saas company selling experience
  - bombcar 4y ago
    However there have been cases of a product being used internally because a board member recommended it. I’ve seen small versions of it myself.
  - linuxftw 4y ago
    My source: Worked for a startup hosting company, our biggest clients were backed by the same VC's as us.
Gasp0de 4y ago
Tether is one of them, I suppose. No one has been caught (yet).
xiphias2 4y ago
It's not that they are smart. It seems more to me like governments don't want to take financial crimes (specifically fiditiary duty) seriously, as it would make precedent for bankers who do the same crimes, just less visibly (bailouts).
- JofArnold 4y ago
  More likely it's a question of resource. I expect there's more crimes than people available to prosecute.
datavirtue 4y ago
Sure. Look into any dictator that was installed by the CIA. Emboldened by their power and shady alliance with the US, they usually go on a financial crime spree--stealing billions.
michael1999 4y ago
Lots of people building real businesses do shady things on the way up. John Hempton wrote up a great example of this about a failed short play against Steve Madden Shoes[0]. Steve Madden may have been a fibber, but he made shoes people wanted to buy. The value of the shoes was larger than the fakery. But when you are selling financial services, this kind of fakery almost always blows up because the accounting is the product. And if the accounts are fake, the thing is fake. Fake accounts always leave a hole that can only grow with each cycle of fraud. Dan Davies wrote a great book titled "Lying for Money" on the whole sorry process[1]. Galbraith called it the "bezzle". [0] - http://brontecapital.blogspot.com/2011/05/steve-madden-counter-example.html http://brontecapital.blogspot.com/2011/05/steve-madden-count... [1] - https://www.goodreads.com/book/show/38605195-lying-for-money https://www.goodreads.com/book/show/38605195-lying-for-money
- michael1999 4y ago
  Lol. Just discovered that Munger coined febezzle to describe the "wealth effect" a boom/bubble produces. That gap between value created and quoted market cap can grow very large even without manifestly criminal activity. This is effectively a "bezzle", and likewise, will only grow until it explodes. Which is why the longer a bubble runs, the more painful it is when it pops. http://mungerisms.blogspot.com/2009/09/philanthropy-round-table.html http://mungerisms.blogspot.com/2009/09/philanthropy-round-ta...

sbarre 4y ago

Any kind of electronic gambling setup is amenable to insider scams. Keep it low-key, don't get greedy, and you can probably milk it forever.

linuxftw 4y ago

> perpetrators are smart enough to avoid being caught. IMO, many startups are scams on some level. VC A funds company X. VC A also funds company Y. Company Y 'decides' to use company X's hot new product and has a lofty enterprise license. This happens a few more times. Company X now has very large revenues, VC's friends at big-nation-bank decide it's time to IPO and cash out.

joecasson 4y ago
I wish a VC's recommendation or direction was all it took to get a deal done. Getting a "lofty Enterprise license" through procurement is so much harder than you are stating. They can make an introduction, sure, but very few VCs are micromanaging to the point of determining a portfolio company's tech stack. Source: a decade of VC funded Enterprise saas company selling experience
- bombcar 4y ago
  However there have been cases of a product being used internally because a board member recommended it. I’ve seen small versions of it myself.
- linuxftw 4y ago
  My source: Worked for a startup hosting company, our biggest clients were backed by the same VC's as us.

Gasp0de 4y ago

Tether is one of them, I suppose. No one has been caught (yet).

xiphias2 4y ago

It's not that they are smart. It seems more to me like governments don't want to take financial crimes (specifically fiditiary duty) seriously, as it would make precedent for bankers who do the same crimes, just less visibly (bailouts).

JofArnold 4y ago
More likely it's a question of resource. I expect there's more crimes than people available to prosecute.

datavirtue 4y ago

Sure. Look into any dictator that was installed by the CIA. Emboldened by their power and shady alliance with the US, they usually go on a financial crime spree--stealing billions.

michael1999 4y ago

Lots of people building real businesses do shady things on the way up. John Hempton wrote up a great example of this about a failed short play against Steve Madden Shoes[0]. Steve Madden may have been a fibber, but he made shoes people wanted to buy. The value of the shoes was larger than the fakery. But when you are selling financial services, this kind of fakery almost always blows up because the accounting is the product. And if the accounts are fake, the thing is fake. Fake accounts always leave a hole that can only grow with each cycle of fraud. Dan Davies wrote a great book titled "Lying for Money" on the whole sorry process[1]. Galbraith called it the "bezzle". [0] - http://brontecapital.blogspot.com/2011/05/steve-madden-counter-example.html http://brontecapital.blogspot.com/2011/05/steve-madden-count... [1] - https://www.goodreads.com/book/show/38605195-lying-for-money https://www.goodreads.com/book/show/38605195-lying-for-money

michael1999 4y ago
Lol. Just discovered that Munger coined febezzle to describe the "wealth effect" a boom/bubble produces. That gap between value created and quoted market cap can grow very large even without manifestly criminal activity. This is effectively a "bezzle", and likewise, will only grow until it explodes. Which is why the longer a bubble runs, the more painful it is when it pops. http://mungerisms.blogspot.com/2009/09/philanthropy-round-table.html http://mungerisms.blogspot.com/2009/09/philanthropy-round-ta...