The biggest red flag is that this guy is supposedly still freelancing.
If he had a strategy this good, he would've quit freelancing and be a multimillionaire by now.
The only reason I'm not 100% convinced this is fraud is that it's on the Indian market. I don't know the level of sophistication there, so it might still be possible for an independent trader to exploit winning strategies.
This is deception which and walks a fine line between legit and fraud. It doesn't matter what you think about who should do this or not - someone will attempt to emulate it, and they will end up in prison for taking money and not producing anything. It degrades the reputation of entrepreneurs everywhere who are diligently trying to build their businesses the RIGHT way.
The fact that you brag about it so boastfully is atrocious to be honest.
I'm not even sure if I would consider this fraud (personally).
I mean, if the initial outstanding orders were at risc of actually being bought and he had to deliver, then I think it is just fine that the market is naive enough to judge the worth of a company on some anonymous seller, rather than company performance and market-place condition of said company.
What's next, you start moving stock prices through twitter bots?
I think stock traders should be punished by the market place for acting on poor signals and acting like sheeps.
If he could in fact not deliver the initial sales, then not only is it fraud, but it is a broken system that allows you to put up stuff for sale that you don't own.
I know what you mean, but I don't think I'd call any method of fraud a "great" way to make money. Even as small as he is, that's still taking him to jail when he gets caught. Eventually he'll get high enough on their list that he'll be worth stopping.
Well, are you sure about that? The whole market manipulation he does with stocks and crypto is not ‘fraudulent intentions’? Sure, he might not be frauding with his products, but I would think it is fraudulent. Did he not actually pay a securities fraud fine a few years ago? And he just keeps doing it; he makes more from the rise and fall than he will ever pay in fines. It is smart but they are fraudulent intentions. We don’t really know how many corners were cut (or how deep) in other places; if they didn’t succeed we would have known about them probably, but things are easily forgotten when there is success.
Considering he controls both firms, keep in mind he could even offer to split the fees, or offer to pay 90% of the fees. Then it sounds pretty generous instead of shady...
At the end of the day, this scam works because someone confidently tells you over video that he wants nothing more than to invest 10 million dollars and the only thing that would possibly stop him would be that if due diligence discovered fraud at your startup. It'll keep working, and it's basically because people aren't used to dealing with conmen who are willing to look you in the eye, shake your hand, etc.
If you liked the content of the article, I urge you to read the excellent book "Lying for Money: How Legendary Frauds Reveal the Workings of Our World" [1] by Dan Davies, which I believe is the main source of inspiration for this article (I'm just guessing here, I have no proof of that).
I discovered this book through another great post by Patrick McKenzie, "The fraud supply chain" [2] where he heartily recommend it, and I haven't been disappointed. On top of being informative, the book is very entertaining to read.
I believe they call that "deception", the definition of which is telling people something exists which does not in order to get their buy-in. Had he taken so much as a single dollar in revenue from someone, it will be fraud. It ruins the reputations of legit startups everywhere.
One of the things you have to understand about fraud is that much of it isn't rationally planned from the get-go. People get into situations and get caught up in the dynamics of them.
Imagine a founder. He has an idea he thinks is brilliant. A sure money-maker. He's a bit of a dreamer, and objective observers would question whether it's possible. But the nay-sayers have been wrong before, and he believes in the idea. So he goes looking for money.
As part of that process, he learns to pitch. He figures out the most convincing things to say, and how to say them with maximum persuasion. Is what he saying true or correct? That doesn't really matter. It might not even be knowable at this point. The key incentives for him are whether people respond emotionally in ways that they give him money.
So imagine he does that and he gets the money. He has some investors who expect big returns. They may not really understand the topic, but they liked his confidence, and they too started to believe. But what they really want is more money back, and their belief is going to be partly contingent on seeing that happen.
Our founder starts to spend the money, trying to make it real. Maybe the product works. Maybe he has some success selling it. (Maybe he is even selling it despite it not working, a surprisingly common outcome.) It's not going as well as he hoped, but he's still confident. He still believes. Because that's the performance his investors want for him. But he's used to putting a positive spin on things, so he tells investors what they want to hear that it's going great.
At some point, some of the investors get nervous. They expected returns. He led them to believe there would be big returns. So he pays some of those people some money. An accountant might say he has to pay them profits, not other investors' money. But the money's all jumbled up both in his head and in the world. If there's any impropriety, something his brain will anxiously skip over, he knows he'll make it right in the end. Because this is going to be a big success.
From there, the cycle continues. The founder digs the hole deeper and deeper over time. As long as he's confident, as long as he performs success, new money will keep rolling in. And with it comes hope. Maybe it will all work out! Maybe they'll be so successful that they'll pay everybody back and nobody will notice a little early corner-cutting.
Objectively, of course, things are getting more and more obviously criminal. But there's nobody objective around. The founder is instead surrounded by dupes, fools, and the complicit. To the extent that anybody honestly recognizes the criminality, they mostly don't talk about it or they get out ASAP.
So to answer your question, there is generally no planned endgame, the same way I didn't have a planned endgame for eating a lot of cheeseburgers in my 20s. I may have heard about the consequences, but they didn't affect my behavior. It's not that I had a bad plan. I not only had no plan, but didn't think enough about the future to even have a place in my mind where a plan would go.
Really, yes obviously that's fraud but apparently it's perfectly normal as long as you don't get caught.
Artificially inflating the numbers whilst shopping for investments is definitely not acceptable. Pumping money around is an old trick to inflate the visible size of a company, some of these schemes are surprisingly hard to detect (the one here definitely isn't).
I'm somewhat surprised that there was no oversight in place that would have stopped this, that's serious money.
I doubt it's fraud-level, but it is cashing in on the hype-machine in the silicon valley. If there wasn't a market for this, then we wouldn't be reading this article.
VCs do due diligence - success for them isn't just funding a real business, but more along the lines of cashing out at the right moment.
Not sure why the downvotes. Fraud is a serious issue that can tank anyone's side project or even company. I'm curious and open to opinions on why this isn't a concern here, or why I am incorrect.
That's the most cynical way to look at it. Another way is, a guy discovered a huge fraud and planned to make it public. A hedge fund offered to pay him a pile of money for advance information about it.
Man, this trend of flinging shit on everyone just to grab some eyeballs and increase your own stock in the market has to stop. So, Id argue the author of this post is a bigger fraud.
Furthermore, what about everything he said pre-blow-up? If not fraud, surely it must be misleading investors (aka stealing from rich people, which is a big no-no).
If he had a strategy this good, he would've quit freelancing and be a multimillionaire by now.
The only reason I'm not 100% convinced this is fraud is that it's on the Indian market. I don't know the level of sophistication there, so it might still be possible for an independent trader to exploit winning strategies.
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