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Buyers of Radio Shack, Pier 1 brands accused of running $112M Ponzi scheme
SEC release: https://www.sec.gov/enforcement-litigation/litigation-releases/lr-26413 https://www.sec.gov/enforcement-litigation/litigation-releas...
- wdb 1y agoI think I have seen this Radioshack story on CoffeeZilla's channel ages ago?
- deleted 1y ago[deleted]
- perihelions 1y agoPrevious context? https://news.ycombinator.com/item?id=29607989 https://news.ycombinator.com/item?id=29607989 ("RadioShack – Bringing Cryptocurrency to the Mainstream (radioshack.com)" (2021)) https://news.ycombinator.com/item?id=31958998 https://news.ycombinator.com/item?id=31958998 ("RadioShack reinvents itself as a crypto platform with wild tweets (washingtonpost.com)" (2022)) (Amusing to count five different HN'ers calling it a "scam", and two more calling it a "Ponzi").
- trollbridge 1y agoCirca 2010, I met Tai and he wanted some work done for his portfolio of dating websites he had back then. (He had a whole bunch of them targeted to various ethnic groups, religious subgroups and so on.) It became apparent that (a) he had a huge pile of messy PHP, WordPress-based sites, and then (b) expressed contempt for paying $35 an hour for programmers since his opinion was you could get programmers in the third world for $5 an hour. He negotiated me down to $25. I ended up declining. Like many people who crow about how they’re a “millionaire”, when it came time to show the money, he was suddenly really concerned about very small amounts of money here and there.
- ariwilson 1y agoI don't know Tai Lopez and he seems like an asshole based on his public persona but I think you'd be surprised by the number of (especially first generation) millionaires who will negotiate over pennies. The easiest way to have a lot of money is to earn a lot and not spend a lot.
- loa_in_ 1y agoHaving money allows you to spend time elsewhere, like cherry picking desperate employees. I know temp agencies that have it as the whole business model. If you aren't desperate you don't fit.
- jimmydddd 1y agoA friend is in commercial real estate. If you own office or warehouse space, he finds you a company to rent the space, and help negotiate the deal. Then after the deal is done, the (very wealthy) building owner often will try to re-negotiate down the agreed to fee, or say he'll pay it in four years. The guy works for 6 months getting the deal done, is supposed to get like $25K, then the wealthy building owner says he'll give him $10K and will pay over 4 years. Crazy business.
- vintermann 1y agoEarning a lot does the heavy lifting here (and rent of various kinds does the heavily lifting of that in turn). It's far, far easier to be "frugal" in % of your income when your income is high. People like this Tai guy pay a premium for screwing people over, they pretty clearly could have made more money, more safely, if they didn't love the feeling of getting one up on you. That explains their attitude better than some virtue of frugality.
- qingcharles 1y agoI've known several very rich people and the first thing I learned was that they are rich because they never spend their own money on anything.
- bitwize 1y agoA study found that most American millionaires lived in modest homes and drove used American cars. They made their wealth by being concerned about relatively small amounts of money because it adds up. When we think "millionaire" we think of the dream that is sold to us by Hollywood—mansions, fancy cars, endless parties. But entertainers are paid in the millions and then encouraged to live like billionaires, so that they're desperate enough to continue being slaves to the entertainment-industrial complex to keep the gravy train going. But $35/hr was a pittance for a programmer even in 2010. Tai Lopez is a gigantic tool for cheaping out on that.
- DiscourseFan 1y agoWell actors have a very strong union in the US, they used to be paid peanuts. When you have that kind of labor power, your security comes from the union, not your stored wealth, so they can afford to spend because they know they will be well compensated for their work.
- hollerith 1y agoActing is notorious for being a bad career choice, and the small fraction of actors who become wealthy through acting do so because of the structure of the market for entertainment (namely, fame sells tickets, so the employers of entertainers all want to hire already-famous entertainers, making it very difficult for unknown entertainers to become famous, which is necessary to start earning good money), not because of anything to do with any union.
- lupusreal 1y agoSince ancient times, acting and prostitution have been considered closely related industries and I think this probably never changed. The actors who "make it big" are the ones that win favors with producers one way or another, probably in many cases by sating their perverted desires. Some of this was revealed in #MeToo cases, like all the Weinstein stuff.
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- iammrpayments 1y agoLately he has been promoting “AI automation agency” course. He says anyone can label themselves “AI automation expert” and charge thousands of dollars for it, then just use vibe coding tools to do the job or outsource it. He also says he built an entire app using replit.
- nextworddev 1y agoUnironically the gap between his AI automation agency and VC backed "Enterprise Automation" startups is smaller than you think..
- dragonwriter 1y agoIt is kind of fundamental to the nature of bubbles that near their peak they tend to feature more traditional investors backing ventures that in any other context everyone with any common sense would stay away from because the ratio of scam red flags to rational bases for believing it was a good investment are too high.
- walthamstow 1y agoQuite. Sounds as much like Builder.AI, the London startup where AI genuinely did stand for "actually Indians", as it does Amazon Go, whose pick-and-go stores had their cameras monitored by people in India to ensure it all worked as they said it did.
- nextworddev 1y agoDon’t forget most vertical AI “agent” startups
- rurp 1y agoI am so shocked someone like this would jump on the AI hype train!
- thr0w 1y agoNever met him personally, but one of his companies tried to recruit me for a database migration project. Part of the interview process included responding to the question "I enjoy having sex with people I hardly know" on a scale from strongly disagree to strongly agree.
- collingreen 1y agoDude what the actual F. This is a crazy thing to put into a job interview.
- userbinator 1y agoUnless it's for a job in the adult entertainment industry.
- cluckindan 1y agoOr if the ”recruiter” is foreign military intelligence looking to compromise people who may land in positions of interest during the next 20-30 years. People such as database administrators.
- collingreen 1y agoLol great point!
- nenenejej 1y agoThis guy loves court cases I guess?
- electroglyph 1y ago[flagged]
- usui 1y ago[flagged]
- modeless 1y agoPeople may remember Tai Lopez from his "Here in my garage, just bought this new Lamborghini here" YouTube ad, subject of several parodies such as: https://www.youtube.com/watch?v=0GIwTG8V-Ko https://www.youtube.com/watch?v=0GIwTG8V-Ko I think he was one of the first to realize that you could take regular YouTube videos that are several minutes long and turn them into skippable pre-roll ads, and some people would watch the whole thing. I know nothing else about him and I hope to keep it that way.
- ubermonkey 1y agoI only clicked into this thread hoping someone would link exactly that video.
- Hikikomori 1y agoI've had that video in my saved videos playlist for so long now.
- tschwimmer 1y agoTai Lopez became so famous he was immortalized in the cute rogue-like "Going Under" where he is spoofed as the "Hauntrepreneur"[0] https://going-under.fandom.com/wiki/Hauntrepreneur https://going-under.fandom.com/wiki/Hauntrepreneur
- mikert89 1y agohe legitatmely innovated/invented a whole type of youtube channel/influencer. clearly was never a moral person, doesnt mean he wasnt influential
- altairprime 1y agoDoes mean I’ll make sure not to remember his name, though! Thanks, I had no idea who he was until this thread, appreciate the opinion.
- 29athrowaway 1y agoNot because you are next to a Lamborghini it means it's yours. And many houses featured in videos are content houses... (lavish rentals for influencers to have a luxury background for their videos) https://en.wikipedia.org/wiki/Content_house https://en.wikipedia.org/wiki/Content_house https://blog.giggster.com/how-to-rent-a-tiktok-collab-house-for-a-day-in-los-angeles/ https://blog.giggster.com/how-to-rent-a-tiktok-collab-house-...
- deleted 1y ago[deleted]
- monkeyelite 1y agoI wonder if his prominent online persona made him more likely to be targeted. People at the SEC are very likely to be in the age range who is familiar with him. Not to suggest he is or is not guilty but that being loud often makes others watch you more closely.
- lolc 1y agoI think it's the other way around: There are many fraud cases like his. We only hear about this one because he is notorious.
- phendrenad2 1y agoOverstating the success rate of your business model, moving funds between subsidiaries when the investor agreements said they wouldn't be, and embezzling funds. Did I get the claims here right?
- nenenejej 1y agoI wonder if it is all legal had he been forthcoming. I heard the "borrow money to pay dividends" thing was a well worn playbook. Not necessarily a ponzi. ut usally borrowed money serviced by earnings. Is it illegal because it wasn't stated? How to they prize apart ponzi from just aggressive debt.
- hattmall 1y agoIt's only a Ponzi if you are not actually engaged in any real business activity. Financing payments to early investors with later investors money isn't a great indicator of the quality of the business but it's acceptable if you aren't misrepresenting things to get the new investors and there is legitimate business activity.
- DonHopkins 1y agoIt's only a Ponzi scheme if it comes from Ponzi Vineyards. Otherwise it's just sparkling fraud. https://www.ponzivineyards.com/ https://www.ponzivineyards.com/ https://www.google.com/maps/place/Ponzi+Vineyards/@45.3796192,-122.9378524,793m/data=!3m1!1e3!4m14!1m7!3m6!1s0x549512ee10f10d5b:0x5231f19f81ad117e!2sPonzi+Vineyards!8m2!3d45.3797401!4d-122.9363463!16s%2Fg%2F1tdkrh_7!3m5!1s0x549512ee10f10d5b:0x5231f19f81ad117e!8m2!3d45.3797401!4d-122.9363463!16s%2Fg%2F1tdkrh_7?hl=en&entry=ttu&g_ep=EgoyMDI1MDkyNC4wIKXMDSoASAFQAw%3D%3D https://www.google.com/maps/place/Ponzi+Vineyards/@45.379619...
- SpicyLemonZest 1y ago"Ponzi scheme" isn't a legal term, the specific SEC claims are all about fraud. But the point of calling it that is to emphasize that there was very little underlying business value to be honest about. I don't think there's any point in picking apart the story for the few parts that might have been legal if they were properly disclosed - if the SEC's allegations are correct, many of those parts would have only existed in the first place as tools to help disguise the fraud.
- RainyDayTmrw 1y agoAs this is a tech forum, I expect that the name that stands out is Radio Shack, and I do agree that that story is tragic. For me, as a long time New Yorker, the other name that stands out is Modell's. They were, for quite a long time, a fixture in New York City and beyond. Even for us not sports inclined, we still knew Modell's as a reliable retailer of sneakers throughout the years. Arguably, their Covid era bankruptcy was already the end, and this was just private equity puppeting the corpse. Nevertheless, it's a sad and nostalgic story.
- onionisafruit 1y agoI thought you were going to say Pier 1 instead. Because I was scammed into buying wicker furniture circa 1994, I’m not surprised pier 1 is continuing buying a legacy of scams.
- smogcutter 1y agoGotta go to Mo’s!
- kindakeepinup 1y agoI sang that.
- dcrazy 1y agoIf it helps, Dick’s is from Binghamton.
- deleted 1y ago[deleted]
- reaperducer 1y agoYour comment makes me wonder what ever happened to Crazy Eddie.
- datadrivenangel 1y agotax fraud.
- dboreham 1y agoSee also: Oracle?
- LarsDu88 1y agoTai Lopez, the lamborghini youtube influencer, bought Radioshack? The company that once challenged Apple for the home computer market with Tandy Computers?
- filoleg 1y agoYes, he bought a dead husk of a company. After tons of internal crisises, mismanagement, and consecutive revenue losses, Radioshack got delisted from exchanges and eventually filed for chapter 11 bankruptcy in 2015. After that, Radioshack got acquired, got mismanaged again, the parent company went broke, and Radioshack filed for bankruptcy again in 2017. By the time Tai Lopez got his hands on it (late 2020), there was pretty much nothing of value left there, except the brand (and even the brand was a questionable value proposition at that point tbh).
- Mistletoe 1y ago> they said their portfolio companies were "on fire" and that "cash flow is strong." I’m sorry but what kind of idiot would believe this about the zombie online version of Radio Shack that remained?
- some_guy_nobel 1y ago""" REV Chief Operating Officer Maya Burkenroad is also accused of aiding Lopez and Mehr's alleged crimes. On REV's website, Burkenroad, who is Lopez's cousin, was described as having "over 10 years of experience managing multi-million-dollar companies," according to the complaint. But the SEC claims Lopez and Mehr misrepresented her experience. Before joining REV, she had worked as a substitute preschool teacher, a promoter at a radio station, and as an assistant to Lopez at a prior endeavor, the complaint alleges. """ Nice family. Hopefully they get lots of jail time.
- sokoloff 1y agoOne of the most painful interviews I recall was Limor Fried (Ladyada) interviewing Tai about RadioShack. https://youtu.be/u8wwBIA8wMw?si=cKWzNq4Qu_nCQcMA https://youtu.be/u8wwBIA8wMw?si=cKWzNq4Qu_nCQcMA I tried to pick out the most painful segments, but it was hard to choose. 6m30s is a strong contender but 28m31s takes the crown for me.
- ThePowerOfFuet 1y agoTracking-free link: https://youtu.be/u8wwBIA8wMw https://youtu.be/u8wwBIA8wMw
- sokoloff 1y agoThank you! Was quickly composed on mobile and I didn't notice it had the tracking salt on it (and it's too late for me to edit the original).
- xaxaxa123 1y ago[dead]
- jimnotgym 1y agoPrediction: If they are found guilty, their company will get fined, they will still be rich. This will keep happening unless you a) take back their personal wealth and return it to investors and b) put them in jail & c) black list them from holding office at a corporation in the future.
- ekjhgkejhgk 1y agoI dont know. Pre-Trump that is NOT what used to happen in these cases. Defrauding your investors used to actually land rich people in jail.
- loa_in_ 1y agoBut it's not investor fraud if it actually makes the company money and is at least somewhat in the gray area.
- filoleg 1y agoNo, it is still fraud, even if your fraudelent actions ended up making the investors/company money. And it will land you in prison. This is exactly what Martin Shkreli spent his time in prison for (and not for anything related to Daraprim drug price increases, despite what some people apparently believe, as I discovered). TLDR (with a great deal of oversimplification): he ran a hedge fund (MSMB) and was lying to investors about how much money the fund had and about the investment strategies. He then started a pharma company called Retrophin and used some of his equity in Retrophin to compensate the MSMB investors for their losses (without their knowledge, i.e., basically the exact same issue with lying about investment strategies to investors he had earlier). It just so happened that Retrophin ended up performing fairly well at the time, and that equity actually ended up making profit for those investors overall. Investors/company making money in the end is not a valid defense against fraud charges. If a hedge fund manager or a CEO cashes out the investor/company accounts in secret, goes to Vegas to place it all on red, makes a gain, and then puts it back into the investor/company account, it is still a crime. Despite the fact that the investors/company made money in the end, I don’t think it is wrong to call this a fraudelent move. However, the wheels of justice tend to be slow, and it might take some time for the consequences to catch up. Those fraudelent actions on Shkreli’s part were taken around 2012-2013, the investigation was opened in 2015, and he got convicted in 2017.
- animitronix 1y agoNo shit. End private equity.
- RexFactorem 1y ago[dead]
- dancemethis 1y agoI can't read "Ponzi scheme" without thinking "Bonzi Buddy scheme". Y'all should just change the term already.