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About 8 years ago an investor in my first company was defrauded by a con artist. This led me on a crazy 4 year chase which resulted in the discovery of a series
by bsims 14y ago
About 8 years ago an investor in my first company was defrauded by a con artist. This led me on a crazy 4 year chase which resulted in the discovery of a series of pump and dump stock frauds worth over $1 billion (think Enron, divided into smaller pieces) and possible ties to terrorism. This was a result of class action lawsuits, SEC investigations etc. None of which resulted in any type of jail time, and one of the individuals lives nicely in a 20 bedroom mansion in Barbados.
The sad part about all of this, was that I notified the SEC on multiple occasions with physical proof that people were defrauding the government and individuals. The SEC's responsibility wasn't "to handle foreign citizens." Homeland Security "didn't handle securities cases." The IRS needed the person's Social Security Number, name and address. When someone moves from one state to another, the states stop communicating on any type of prosecution.
The whole process was a fascinating/scary insight into how easy it is to commit fraud in the United States.
So as a word to the wise for first time entrepreneurs, don't be afraid to ask investors, VCs or others where their money comes from.
- dbcooper 14y agoPlease write a blog post on this!
- bsims 14y agoWill do. Mind being a second set of eyes on it?
- dbcooper 14y agoNo problem.
- jjsz 14y agoMay the audience get the link of where you're going to post it? Thanks.
- hncommenter13 14y agoIf you're looking for a 3rd pair of eyes, happy to help. Ex-VC, CFA/MBA, have spent some time investigating stock frauds as well (but not quite to your level!).
- bsims 14y agoThird set of eyes would be helpful. The most difficult part will be figuring out how to condense it down.
- SilasX 14y agoSeconded!
- bsims 14y agoDB, can you send me your email?
- dbcooper 14y agoSent an email to the address on your website.
- jacquesm 14y ago> So as a word to the wise for first time entrepreneurs, don't be afraid to ask investors, VCs or others where their money comes from. Is the $150K Yuri Milner convertible loan offer still open?
- bsims 14y agoTo my knowledge yes, but it was reduced in the last batch. http://thenextweb.com/insider/2012/11/26/y-combinator-reducing-investments-to-80k-per-startup-but-including-office-hours-from-all-vcs/ http://thenextweb.com/insider/2012/11/26/y-combinator-reduci...
- jacquesm 14y agoIn that case if you are concerned with the source of your investors money (and I believe strongly that you should be) you should probably read this: http://www.thenewamerican.com/usnews/politics/item/3286-facebook-are-you-interfacing-with-the-russian-mafia--kgb http://www.thenewamerican.com/usnews/politics/item/3286-face...
- bsims 14y agoThanks for sharing and good example of knowing the source of funds. To clarify, Yuri Milner was not an investor in the company referenced.
- chipsy 14y agoYes, I've only learned about this after experiencing such fraud firsthand. The worst part is that many of the parties that operate the financial markets also have incentives to remain willfully ignorant. They can profit indirectly from the scam, too, and they have ample deniability.
- mgkimsal 14y agobut... download a copy of skyfall and watch fbi/cia/irs/statepolice and anyone else within 50 miles of your house come down on you like a ton of bricks. slight exaggeration, right now, but it's certainly where hollywood would like to see things move.
- smsm42 14y agoI think it is easy to commit fraud because USA, even with myriads of regulations, is a relatively free state. If USA moved to be more of a police state, where you'd have to report every transaction to the authorities, and every "suspicious" action would have you explain yourself to men with guns, fraud would probably much harder. So would be the life of millions of people who are honest and lawful. It is very hard to be strict on fraud without causing trouble to regular activity, ask anyone who designed a security system.
- bsims 14y agoHere is a link to the post you guys were asking for. Hope it is helpful. http://news.ycombinator.com/item?id=5236372 http://news.ycombinator.com/item?id=5236372