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This guy just wasn't smart. If he were, he'd have created a company with an innocuous name like "NextWave" or something. Get some funding (apparently $45k) fr

by mdasen 18y ago

This guy just wasn't smart. If he were, he'd have created a company with an innocuous name like "NextWave" or something. Get some funding (apparently $45k) from environmentalists who don't want to see drilling. Then have NextWave bid on licenses, I mean land parcels that they couldn't pay for. Next, declare bankruptcy so that they didn't have to continue payments to the government. Hold onto the licenses, I mean land parcels until the government decides to settle rather than losing again in a bankruptcy case where someone didn't pay them. They wouldn't get to keep all the land, but they'd get to keep enough that it would be worth their while. Plus, it's the business that's doing this action. Generally speaking, that means the business gets in trouble and not those running it. I'm no lawyer, but it seems like unless you pull an Enron, you don't seem to be individually held accountable. This guy just wasn't smart: http://www.eweek.com/c/a/Mobile-and-Wireless/NextWave-FCC-Settle-Wireless-Spectrum-Battle/ http://www.eweek.com/c/a/Mobile-and-Wireless/NextWave-FCC-Se...

byrneseyeview 18y ago
It's odd that the government wasn't just treated like a normal creditor. Usually in that situation, the party they owed the most to would end up owning all of the equity.
cperciva 18y ago
Using a shell company wouldn't have helped him. What he committed was an act of fraud -- bidding on licenses which he knew he couldn't pay for -- and fraud can pierce the corporate veil. There is extensive legal precedent that a corporation created for the purpose of carrying out a fraud does not provide any protection to the individual(s) behind it. (This is not legal advice. I am not a lawyer. Talk to a lawyer if you plan on committing acts of fraud.)
- mdasen 18y ago
  My comment was more of a late night joke based on how NextWave kept lots of spectrum from serving the public good (and earned a lot of money) doing a similar thing. Oh, and I love Tarsnap!
  - cperciva 18y ago
    ... NextWave ... My understanding is that NextWave was bidding with the expectation that they would be able to pay for the licenses. (In fact, didn't they make the first few years of payments before they went bankrupt?) Oh, and I love Tarsnap! Thanks!
- biohacker42 18y ago
  But what if the "shell" company was earnestly going to raise funding for exploration but then that darn financial crisis struck? Wouldn't you have to prove intent to defraud?
  - cperciva 18y ago
    Yes, but in this case his comments make it clear that he had no intention of raising such funding.
lnguyen 18y ago
Wasn't one of the problems with the auction that it was so hastily put together that they didn't bother with the formal checks to see whether or not the potential bidders could actually pay for the leases? This was what allowed him to enter into the bidding in the first place.

by mdasen 18y ago

byrneseyeview 18y ago

It's odd that the government wasn't just treated like a normal creditor. Usually in that situation, the party they owed the most to would end up owning all of the equity.

cperciva 18y ago

Using a shell company wouldn't have helped him. What he committed was an act of fraud -- bidding on licenses which he knew he couldn't pay for -- and fraud can pierce the corporate veil. There is extensive legal precedent that a corporation created for the purpose of carrying out a fraud does not provide any protection to the individual(s) behind it. (This is not legal advice. I am not a lawyer. Talk to a lawyer if you plan on committing acts of fraud.)

mdasen 18y ago
My comment was more of a late night joke based on how NextWave kept lots of spectrum from serving the public good (and earned a lot of money) doing a similar thing. Oh, and I love Tarsnap!
- cperciva 18y ago
  ... NextWave ... My understanding is that NextWave was bidding with the expectation that they would be able to pay for the licenses. (In fact, didn't they make the first few years of payments before they went bankrupt?) Oh, and I love Tarsnap! Thanks!
biohacker42 18y ago
But what if the "shell" company was earnestly going to raise funding for exploration but then that darn financial crisis struck? Wouldn't you have to prove intent to defraud?
- cperciva 18y ago
  Yes, but in this case his comments make it clear that he had no intention of raising such funding.

lnguyen 18y ago

Wasn't one of the problems with the auction that it was so hastily put together that they didn't bother with the formal checks to see whether or not the potential bidders could actually pay for the leases? This was what allowed him to enter into the bidding in the first place.