Reader’s Note: As the U.S. burns through missiles and interceptors in the Iran war, the Pentagon is scrambling to replenish its arsenal. Defense contractors are ramping up production, reporting record backlogs and collecting billions in new orders. War means enormous spending, desperate demand and pressure to deliver fast. These are ideal conditions for fraud. Today, the Business Blunders Hall of Shame remembers David H. Brooks, who took full advantage of these conditions during the Iraq and Afghanistan wars.

Tour The Business Blunders Hall Of Shame

Miramax Films released a comedy in 2006 lampooning a $500,000 bar mitzvah as the height of parental excess. It was called “Keeping Up with the Steins.”

Hollywood had missed the party. It should have been called “Keeping Up with David H. Brooks.”

Just months before the film’s release, Brooks, a Long Island defense contractor, had thrown his daughter a bat mitzvah that reportedly cost $10 million.

Flush with cash from wars in Afghanistan and Iraq, Brooks took over two floors of New York’s Rainbow Room, built a stage, installed Jumbotrons and assembled a lineup that one rabbi called “Mitzvahpalooza.”

He hired Aerosmith, 50 Cent, Tom Petty, Stevie Nicks, Don Henley, Joe Walsh, Ciara, and Kenny G. (Bruce Springsteen, to his credit, reportedly turned him down.) And Brooks pranced the party in black leather, chains and diamonds before a mid-party costume change into a hot-pink suede getup.

Guests went home with gift bags stuffed with $1,000 worth of electronics. Take that, Stein family and your cheesy, low-budget bash.

Nobody could keep up with David H. Brooks.

Unless, of course, they were cheating shareholders and selling defective body armor to the U.S. military and law enforcement amid the fog of war.

Get rich or die tryin’

Brooks grew up in Brooklyn and Hewlett, Long Island, the middle of three sons of Jewish immigrants and Holocaust survivors.

He earned an accounting degree from New York University and went into the securities business, eventually running a small brokerage operation with his brother, Jeffrey.

In 1992, the Securities and Exchange Commission obtained a permanent injunction against Brooks and hit him with a $405,000 civil penalty for his role in an insider-trading scandal. He was also barred from the brokerage industry for five years.

He could no longer be trusted in the securities industry, so why not go into the defense industry? He bought a body armor company out of bankruptcy and founded DHB Industries the same year he was sanctioned by the SEC.

It was a good business. Sept. 11 made it a great business.

The U.S. invaded Afghanistan in 2001 and Iraq in 2003. Military spending soared, and DHB became one of the nation’s largest suppliers of body armor to the military and law enforcement. Its principal product was the Interceptor vest worn by American troops.

DHB’s soaring stock prices made Brooks spectacularly rich. His compensation climbed from about $525,000 in 2001 to more than $70 million in 2004. And as DHB’s stock approached its all-time high in late 2004, Brooks unloaded about 60% of his holdings for nearly $186 million.

“I’m stanky-rich, I’ma die tryna spend this shit.” – 50 Cent

Livin’ on the edge

A $100,000 belt buckle is a mere trinket to a man willing to blow $10 million on a bat mitzvah.

Brooks made headlines for sporting an American flag belt buckle encrusted with rubies, sapphires and diamonds. He drove Bentleys and Ferraris, took luxury vacations, joined country clubs and made pricey renovations to his expensive homes.

Brooks spent millions on thoroughbred horses. Much of his largesse was billed to shareholders, unbeknownst to them.

He also used company money to pay for prostitutes, not just for himself, but for employees and other associates. His lawyers would later argue that the women motivated his people and made them more productive.

Meantime, the product was suffering.

In 2005, the U.S. military recalled more than 23,000 Point Blank body-armor vests in two separate actions after testing raised concerns about whether they met ballistic and contract specifications.

The second recall came just 10 days before the big bat mitzvah.

That same year, the National Institute of Justice announced that body armor containing a synthetic fiber called Zylon could degrade and fail to provide its intended ballistic protection.

DHB’s stock began to crater. Then in 2006, Brooks left the company as regulators and federal prosecutors dug into its finances.

In October 2007, federal prosecutors indicted Brooks on charges stemming from an elaborate accounting and securities fraud. The SEC sued him the same day.

Brooks had spent years livin' on the edge. Now he was about to go over it.

“There’s something right with the world today;
And everybody knows it’s wrong.” – Aerosmith

Free fallin’

Brooks was freed on a $400 million bond, but his bail was revoked after prosecutors revealed that he and his family had concealed millions of dollars overseas.

Then, during the trial, Brooks was caught trying to smuggle anti-anxiety pills back to jail. They were hidden inside pens that someone had left near his seat in the courtroom.

After an eight-month trial, a federal jury convicted him in 2010 on 14 counts, including securities fraud, insider trading, mail and wire fraud, obstruction of justice and other charges. Sandra Hatfield, who had served as CEO and CFO of the company, was also convicted.

Prosecutors said Brooks had cooked DHB’s books, lied to auditors and investors, dumped millions of dollars of stock at inflated prices and treated the publicly traded company as his personal piggy bank.

He ran just about every trick in The White-Collar Playbook. He also pleaded guilty to tax charges.

In 2013, a federal judge sentenced him to 17 years in prison and ordered him to pay more than $90 million in restitution, forfeit about $65 million and pay an $8.7 million fine.

“DHB Industries made body armor that protected the men and women of the U.S. military, who risk their lives to keep us safe,” said U.S. Attorney Loretta Lynch. “To David Brooks, it was merely a vehicle for plunder and a means to feed his own greed.”

“I’m gonna free fall, out into nothin’; Gonna leave this world for awhile.” – Tom Petty

The end of the innocence

DHB survived its founder and its defective line of bullet-proof vests that had put U.S. service members and law enforcement officers at risk.

The company moved its headquarters from Long Island to Pompano Beach, Fla., changed its name to Point Blank Solutions, and filed chapter 11 bankruptcy in April 2010.

In 2011, Point Blank paid $1 million to settle federal allegations that it knowingly manufactured and sold defective Zylon vests during the Brooks era.

Then in 2011, Point Blank sold substantially all of its operating assets to an affiliate of private-equity firm Sun Capital Partners for $36.6 million. And in 2012, Sun Capital merged it with another body armor maker.

Today, Point Blank continues to make body armor and other protective equipment for the military, law enforcement and other customers.

As for Brooks, he died in prison at age 61. “It was sudden and unexpected,” his lawyer told an appeals court in Miami.

Because Brooks died while his appeal was pending, his convictions were later vacated. There’s a legal doctrine that wipes out convictions when a defendant dies before exhausting appeals. His separate tax convictions, which were not part of the appeal, remained intact.

After his death, Brooks’ estate reached a settlement resolving the SEC case, that included $142 million in reimbursement for bonuses and profits Brooks received from DHB stock sales.

Wars still rage. The company he built still sells body armor. And Brooks still appears to hold the record for the world’s most expensive bat mitzvah.

“Offer up your best defense;
This is the end;
This is the end of the innocence.” – Don Henley

Tour The Business Blunders Hall Of Shame

“Corruption, embezzlement, fraud, these are all characteristics which exist everywhere. … What successful economies do is keep it to a minimum.” – Alan Greenspan.

The latest CNBC All-America Economic Survey out this week posed a couple of no-shit-Sherlock questions:

• Should government officials be allowed to trade stock in companies with federal contracts?

• Should a sitting president’s family get federal contracts?

There’s always a subset of corporate sociopaths at work in America so naturally, 7% said the stock trading was fine and 11% were apparently just ducky with a president’s family scoring federal contracts.

“Grift Becomes Bigger Issue for Voters in Final Days Before Midterms,” screams the headline in today’s Wall Street Journal.

Even a Fox News poll found government corruption was voters’ No. 1 concern, with 60% saying they were extremely concerned, ahead of inflation, gas prices and health care.

President Donald Trump drained the swamp and now he’s monetizing the mud.

“Now it looks like they’re feeding on the swamp,” Marc Short, chief of staff to former Vice President Mike Pence, told the Journal.

Democrats have plenty of their own swamp creatures, too. And for all their outrage, they have never done more than feign concern about Congressional stock trading. (Neither have Republicans.)

How do so many public servants leave Washington so much richer than when they arrived? Trading stocks while writing the rules is one route. Landing a high-paying corporate gig after getting flushed out of office is another.

Food costs ranked a close second in the CNBC poll. Ranking third was protecting democracy.

These issues all go hand in hand.

Without the checks and balances of a healthy democracy, we have big business and billionaires paying off politicians for the privilege of looting the world’s largest economy.

Corporations have corrupted government. Government has corrupted corporations.

An affordability crisis rages. Seemingly few in Washington actually care.

This is where we are: The Golden Age of Grift.

It’s refreshing to discover that despite all the distractions, misinformation and bald-faced lies Americans know it.

Health care fraud for the big screen

It takes a lot of imagination to allegedly commit $2 billion in medical billing fraud, but it looks like a handful of California health care providers should have written scripts for Hollywood producers instead of patients.

On Thursday, the Justice Department announced charges against 15 people in a Los Angeles health care fraud takedown who prosecutors say fraudulently billed Medicare, Medi-Cal and private insurance companies.

Their alleged schemes could be movies, and they’d be funny if America’s health care costs weren’t running off the rails.

Weekend at Bernie’s Hospice: Geoffrey Jimenez allegedly recruited seniors from community centers and put them into hospice, even when they weren’t terminally ill. Some patients didn’t even know they were in hospice. More than a dozen hospices he controlled through Transitions Hospice Inc. billed Medicare more than $107 million. Medicare paid. Nobody had to die.

Plaque to the Future: Prosecutors say chiropractor Hany Malek posed as a medical doctor and diagnosed patients with arterial disease. Cardiothoracic surgeon Harold Tabaie allegedly followed up with invasive procedures to remove plaque, even from patients who didn’t have arterial disease. Medicare got about $135 million in bills. Who needs a tricked-out a DeLorean when you’ve have someone’s Medicare number?

House Party 7: The Relapse: David and Nathan Young allegedly recruited homeless people into addiction treatment with housing, free flights, hotels, gift cards, cigarettes, marijuana and drugs. Prosecutors say some patients were encouraged to drink or use drugs so they could qualify. Private insurers received more than $1.6 billion in bills. Now that’s a party.

21 Days Later: Thomas Mladinich admitted taking kickbacks to send patients to a substance-abuse treatment facility. Recruiters allegedly promised patients a piece of the referral money if they stayed long enough to earn the payout, or at least 21 days. On Day 22, they could walk out like zombies.

Beach Blanket Billing: Nathan Young and David Young both of Los Angeles, and Honey Phipps and Cody Phipps, both of Greenville, Texas, ran group therapy sessions by Zoom calls. Sometimes there were more than 100 people on the calls. Prosecutors say they were required to turn on their cameras, but were told they could go “lay out on [the] beach.” At least the beach was in-network.

A Few Good Genes: Doctors Hassan Badday and Robby Ayoub allegedly took kickbacks for ordering medically unnecessary genetic tests that prosecutors say were rarely, if ever, used to treat their patients. Together, the doctors allegedly generated about $5.5 million in claims. You want the truth? You can’t bill the truth.

Prescription Impossible: When California temporarily suspended prior-authorization requirements for certain drugs, prosecutors say Christina Mareik and others saw an opportunity. They allegedly flooded Medi-Cal with thousands of bogus prescriptions for expensive, medically unnecessary generic drugs. The tab: $269 million billed and nearly $179 million paid. Your mission, should you choose to accept it: Charge the impossible.

Coming soon! To a health care policy near you!

Failure is not final, unless …

Plenty of entrepreneurs have pulled themselves from the ashes of bankruptcy and reformed after prison sentences. Some fail to see any hope.

Ideally, the trick is to keep your business failures small enough that you can recover. Or have the fortitude to try again, no matter what you may have done in the past.

This week, Business Blunders introduced a collection of cautionary tales from executives, entrepreneurs and investors who died by suicide amid business failures, financial losses and corporate scandals.

It’s offered as a stark reminder that no business blunder is worth a life.

Read More: Suicide Is Not Painless (Blunder Lists)

This week’s Ponzi

Timothy France Johnson, 63, of El Paso, Texas, promised investors “zero-risk” returns from his business of financing NBA preseason games.

Instead, they got nothing but net ... losses. Prosecutors say he spent 11 years running a Ponzi scheme, fabricating contracts and using new investors’ money to pay old ones and cover his personal expenses.

Johnson, the estranged brother of El Paso Mayor Renard Johnson, was sentenced Friday to more than four years in federal prison and ordered to forfeit about $3.1 million.

It took 11 years, but the feds finally called the game.

In other Ponzi news this week, don’t miss “Tiptoe Through The Escrow”.(Business Blunders)

When will investors stop feeding the Ponzis?

Good reputation. Bad judgment.

The judge acknowledged he was a good person, but that was not the question before the court. The fact is good people do bad things, and bad people do good things.

Read More: Rajat Gupta – Goldman Sachs (Business Blunders Hall Of Shame)

Tour The Business Blunders Hall Of Shame

Don’t Miss These Blunders

• Jeffrey Skilling – Enron He left for ‘personal reasons.’ He had personally committed fraud.

• Tiptoe Through The Escrow A New York attorney loaned $336 million in client funds to a 33-year-old apartment investor. Now Flagstar Bank is getting dragged into an alleged Ponzi scheme surrounding the mess.

• The Great American Rinse Cycle When Chinese money-laundering networks need a bank, where else would they turn but Bank of America?

• Pharma Bro Can’t Help Himself Martin Shkreli went to prison. He was also banned from the pharmaceutical industry for life. Regulators say he keeps coming back for another dose.

• Billy McFarland – Fyre Festival Prison didn’t end the party. It was just an intermission.

• Desperately Seeking Diesel When Trump runs low on fuel, it’s ‘Fill ’er up, Vladimir’

• 100 Quadrillion Japanese Dogs Kishu Inu founder Alexander Sisemore allegedly bagged $9 million in a crypto ‘rug pull,’ dumping his secret stash of the meme coins on investors. Will crypto enthusiasts buy anything with a dog on it?

• Jérôme Kerviel – Société Générale He cost his bank billions. But who left the vault door open?

• If the Shoe Doesn’t Fit … Nike Can Wear It What a tech CEO didn’t know: People like to try on shoes before they buy them.

• Don Lapre – The Making Money Show His greatest money-making secret was selling money-making secrets.

• Charlie Javice – Frank She was startup wunderkind with a student loan website. She gave JPMorgan Chase a $175 million education.

• The Fake Andy Warhols The art was fake. The provenance was fake. Even the email address was fake. Now the dealer is missing.

• Florida Man Takes Cops For A Ride It takes a lot of balls to rip off police. Pension administrator employee Michael D. Williams settles civil fraud charges without admitting or denying the allegations.

• Scamway The granddaddy of multilevel marketing gets stuck with a record $225 million settlement as regulators finally crack down on Amway.

• Catch And Release Kevin Kolenda kept getting caught selling bogus prize insurance. He never stopped casting for suckers.

• The Sins Not Even Trump Can Pardon Nikola founder Trevor Milton got a presidential pardon. It won’t erase the financial consequences of his fraud.

• LIV And Let Die LIV Golf can beg for a mulligan in bankruptcy court. But who wants to invest in a losing game?

• Amazon’s Imaginary Friend Jeff Bezos’ e-commerce giant allegedly invented a bidder to drive up prices. Guess who pays.

• Basketball Or Ballmer Ball? The NBA just suspended Steve Ballmer, its richest team owner, for allegedly making up his own rules.

• No One Yelled Fore Good Good Golf is paying steep price after running, ‘the worst ad known to mankind’ and taking Callaway down with it.

• Jes Staley’s Magic Kindom When Wall Street was melting down, this top JPMorgan executive sought a financial wizard. He turned to his pal, Jeffrey Epstein.

• Flip This NBA Team Billionaire Mark Walter is scrambling to raise billions after his insurance companies reported a $20 billion investment blunder. Now he’s flipping the L.A. Lakers.

Tour The Business Blunders Hall Of Shame

Enron CEO Jeffrey Skilling abruptly resigned on Aug. 14, 2001, to spend more time with his family.

He’d spent 10 years building Enron from a natural gas pipeline to the seventh-largest publicly traded corporation in America. Then all of a sudden, he claimed he longed for a simpler life.

“This is purely a personal decision,” he told investors in a conference call. “I can’t stress enough that it has nothing whatsoever to do with Enron. I’m doing it solely for personal and family reasons.”

Enron Chairman Ken Lay immediately took his place and tried to calm the market.

On Dec. 2 of that year, the company filed bankruptcy and was soon exposed as one of the most massive accounting frauds of all time.

This was the world’s largest energy trading company going up in a mushroom cloud.

More than 20,000 employees lost their jobs, and in many cases their life savings, since their retirement accounts were loaded with Enron stock that they were restricted from selling. Investors all around the world lost billions.

Skilling was born in Pittsburgh in 1953 and raised in Aurora, Ill. He graduated from Southern Methodist University in 1975 and earned an MBA from Harvard Business School in 1979, where he was a Baker Scholar.

After Harvard, he joined McKinsey & Co., rising to senior partner and specializing in energy before Enron hired him in 1990.

In Houston, he was a man about town. He sat on the boards of directors for the Greater Houston Community Foundation, the Houston Technology Center, and the Houston Branch of the Federal Reserve Bank of Dallas.

In 1997, the New York Mercantile Exchange made him the first recipient of its Director's Award for Global Vision in Energy.

He exuded confidence, but Wall Street swiftly lost confidence in the company he ran following one of his antics during an April 2001 investor call.

It happened when a hedge fund manager demanded more details on the company’s finances. Imagine that. An investor asking about the books.

“You know, you are the only financial institution that can’t produce a balance sheet or a cash flow sheet with their earnings,” the hedge fund manager complained.

Skilling shot back with a flustered, arrogant response: “Well, uh … Thank you very much. We appreciate it … asshole.”

Read More: Enron Was A Parody Of Itself (Business Blunders)

The call was eventually played for jurors who sealed Skilling’s fate. Skilling was convicted on numerous felony charges, despite blaming underlings for the fraud and maintaining his innocence.

“Your honor, I am innocent of these charges,” he said at his federal sentencing in 2006. “I am innocent of every one of these charges. We will continue to pursue my constitutional rights. … I feel very strongly about this, and I want my friends, my family to know that.”

Don't Miss These Blunders

Hard time

Skilling was sentenced on Oct. 23, 2006 to 24 years and four months in federal prison. Lay, who was tried and convicted beside Lay, died in Aspen, Colo., of a heart attack before he could be sentenced.

After years of appeals, a federal judge resentenced him in 2013 to 14 years as part of an agreement that also freed about $42 million for restitution to Enron victims.

In prison, Skilling suffered a deep personal tragedy.

In 2011, his youngest son, John Taylor “J.T.” Skilling, a 20-year-old sophomore at Chapman University, was found dead in his California apartment in an apparent accidental drug overdose. Skilling asked for temporary release to attend his son's funeral. The Bureau of Prisons denied the request.

None of this apparently stopped Jeffrey Skilling from being Jeffrey Skilling.

In January 2018, while he was still incarcerated, his wife, former Enron executive Rebecca Carter, formed Veld LLC in Texas, setting a stage for his next act.

Skilling ultimately served more than 12 years, moving to a Houston halfway house in August 2018 before being released from federal custody in February 2019.

A dead cat bounce

Soon after his release, Skilling was back talking energy.

he began meeting with former Enron colleagues and pitching investors on a new venture that would eventually become Veld Applied Analytics.

Among those reportedly interested was Lou Pai, the former Enron executive who had sold hundreds of millions of dollars of Enron stock before the company collapsed.

It sounded like an idea born from the ashes of Enron.

Veld would use sophisticated analytics to predict the performance of producing oil and gas wells, package interests in them into investment vehicles and create a marketplace where investors could trade them.

Skilling recruited former McKinsey colleagues and other energy experts. And Reuters reported in 2021 that the company had attracted tens of millions of dollars in investment commitments.

Veld also sought a patent for technology that would analyze future production from oil and gas wells. The application contemplated packaging well interests into asset-backed securities and placing them into special-purpose vehicles.

Coming from Skilling, it had a familiar ring. Enron notoriously used special-purpose vehicles to hide debt and losses, although such structures are routinely and legitimately used throughout Corporate America – but usually more properly disclosed.

Somehow, though, Veld apparently didn’t launch the comeback Skilling may have envisioned for himself.

In June 2022, the company transferred its patent application to a newly formed Houston company called DV Analytics LLC. Veld withdrew its registration to do business in Texas two months later.

An October 2022 Securities and Exchange Commission filing identified Houston energy investor John Donovan as DV Analytics’ president, director and promoter.

DV Analytics reported raising $820,000 from three investors in 2022 and another $1.5 million from a single investor the following year.

From there, the corporate paper trail goes as dark as a dying star in a boundless galaxy.

The patent application that Veld had transferred to DV Analytics was abandoned in 2025 after the company failed to respond to a Patent Office action. And Skilling seems to have disappeared from the business world altogether.

Skilling now appears to be quietly living out his golden years in Houston. He rarely surfaces in the press, gives no public speeches or interviews and remains permanently barred from serving as an officer or director of a public company.

Twenty-five years after Skilling left Enron for “personal and family reasons,” he finally appears to have done just that.

Tour The Business Blunders Hall Of Shame

Imagine your trusty attorney is holding the money you parked with him for a real estate transaction.

It’s in escrow. He’s supposed to keep it safe.

Then, when you go to transact, you discover he’s loaned it to a 33-year-old apartment investor who can’t pay it back.

Who do you sue?

Earlier this month, some jilted investors sued Flagstar Bank for allegedly letting something this dumb to happen.

Flagstar inherited this alleged lawyerly Ponzi when it acquired assets from Signature Bank, which famously failed in 2023. But the investors allege that Flagstar had plenty of opportunities to end it.

Flagstar, based in Hicksville, N.Y., is one of the nation’s larger regional banks, with nearly $88 billion in assets and about 320 branches. It has not yet responded to the allegations in court.

The lawsuit, filed on Oct. 6 by Lakewood, N.J.-based lender Blueberry Funding, “seeks to hold Flagstar liable for what Flagstar itself knew, and did, after it took over the Trust Account.”

Which brings us to the owner of that account, disbarred New York commerical real estate attorney Mark Nussbaum, who operated as Mark J. Nussbaum & Associates and later Nussbaum Lowinger LLP.

At some point, practicing law wasn’t enough.

Nussbaum branched into hard-money lending, bridge loans and something called “liquidity enhancement,” with the money flowing through his firms’ escrow accounts.

He built much of his business within the close-knit Orthodox Jewish communities in New York and New Jersey, connecting investors who had money with developers who needed it.

One of his specialties was “show money.” If a real-estate investor needed to convince a seller or lender that he had millions of dollars available, Nussbaum could temporarily provide the cash. The investor showed the money, the deal closed, the cash came back and Nussbaum collected a fee.

At least, that was how it was supposed to work.

Don't Miss These Blunders

Nussbaum reportedly loaned $336 million to a 33-year old hustler named Mendel “Mendy” Steiner.

In 2023, a Fitch Ratings report said this young real estate magnate had “close to 12 years of experience in real estate and currently owns 62 multifamily properties consisting of more than 4,482 units.” His empire sprawled across New York, New Jersey, Ohio, Georgia, Indiana, Illinois and Virginia.

But Steiner can’t repay his loans.

Read More: Suicide Is Not Painless (Blunders List )

He took his own life on Jan. 9, 2025 as his as his heavily leveraged apartment empire unraveled.

So what was Nussbaum to do with such a big hole in his client trust accounts?

According to a New York judge, he ran a Ponzi scheme, bringing in new money to cover old obligations, and eventually filed bankruptcy.

Hundreds of millions of dollars had been moving in and out of trust accounts at a furious pace. Somebody was processing those transactions and somebody should have heeded the red flags.

That somebody was Flagstar Bank.

So much for the name.

Read more

Only two people have taken their own lives while I was writing about their devastating business blunders. They were both bankers.

One was Ed Mattar, who founded and ran to ruin the Best Bank of Boulder. Hours before he was to be sentenced to prison, he died by suicide in a Denver hotel.

The other was Michael Wise, who became an icon of the savings-and-loan bust as the former CEO of Denver’s Silverado Banking. He was never convicted in that scandal.

He later went to prison for an unrelated Ponzi scheme and, upon release, went to work for a mortgage company. After the company shut down amid the 2008 financial crisis, he found himself out of a job.

In April 2009, he took his life at Tampa International Airport.

This is not how any life should end. No failure, no fraud, no financial loss is worth a life.

Business disasters can feel permanent when you’re living through them. They aren’t. Fortunes can disappear. Companies can fail. Reputations can be destroyed. People go to prison and come out again. Life goes on.

The Monopoly game includes a “Go to Jail” card, and maybe that’s as bad as any business life should get.

An August 2026 report from The World Health Organization reports that around the globe:

• More than 720,000 people die due to suicide every year.

• Suicide is the third leading cause of death among 15–29-year-olds.

• Seventy-three percent of global suicides occur in low- and middle-income countries.

• The reasons for suicide are multi-faceted, influenced by social, cultural, biological, psychological, and environmental factors present across the life-course.

• For every suicide there are many more people who attempt suicide.

Wealth and professional success offer no immunity. For some, the despair of a massive blunder, and the public humiliation that can follow, has apparently felt unbearable.

In January 2002, Enron executive J. Clifford Baxter took his own life after agreeing to testify before Congress regarding a massive corporate fraud scandal.

Carol,
I am so sorry for this. I feel I just can’t go on. I have always tried to do the right thing but where there was once great pride now it’s gone. I love you and the children so much. I just can’t be any good to you or myself. The pain is overwhelming.
Please try to forgive me.
Cliff

Not even Enron was worth a life.

This Blunder List is a collection of cautionary tales and a memorial to executives, entrepreneurs and investors who died amid business failures, financial losses and corporate scandals. (For details, free links to reporting are included in each item.)

Some caused the catastrophes that engulfed them. Some were victims of other people’s misconduct. Some simply found themselves trapped inside events they could no longer control.

Learn More From Blunder Lists

Mendel Steiner – Real estate investor

On Jan. 9, 2025, Steiner took his life at age 33 as his heavily leveraged empire began to unravel. He had built a sprawling apartment portfolio encompassing thousands of units across several U.S. cities. Steiner had received hundreds of millions of dollars in loans from what authorities later alleged was a Ponzi scheme run through a New York law firm’s escrow accounts. The scheme unraveled when Steiner could no longer repay the money. Steiner died before those allegations could be tested against him in court.

Markus Jooste – Steinhoff

On March 21, 2024, Jooste, the former CEO at the center of Steinhoff’s massive accounting scandal, took his own life at age 63. His death came one day after South Africa’s financial regulator imposed a $25 million fine for false and misleading financial statements. Steinhoff was the parent company of the ubiquitous Mattress Firm in the U.S. Read More: A CEO Who Made His Own Bed (Business Blunders)

Gustavo Arnal – Bed Bath & Beyond

On Sept. 2, 2022, Arnal, Bed Bath & Beyond’s chief financial officer, plunged from a building as the struggling retailer was closing stores, cutting jobs and trying to stave off financial collapse. His death, which came at age 52, was ruled a suicide. It came just days after the company announced a major restructuring plan.

John Gembara – Washington Federal Bank for Savings

In December 2017, Gembara, CEO of Chicago’s Washington Federal Bank for Savings, took his own life at age 56 shortly before federal regulators closed the bank. Subsequent prosecutions exposed an extensive embezzlement and fraud operation at the institution.

Martin Senn – Zurich Insurance

On May 27, 2016, Senn, the former CEO of Zurich Insurance, took his own life at age 59. His death came about six months after abruptly leaving the company following disappointing financial results and the collapse of its planned $5.6 billion takeover of RSA Insurance Group.

Pierre Wauthier – Zurich Insurance

On Aug. 26, 2013, Wauthier, chief financial officer of Zurich Insurance, took his own life at age 53. His death came after he reportedly complained about intense pressure from company Chairman Josef Ackermann. Ackermann resigned days later, although an investigation subsequently cleared him of responsibility for Wauthier’s death.

Carsten Schloter – Swisscom

On July 23, 2013, Schloter, CEO of Swisscom, took his own life at age 49. He had spoken publicly about the relentless pressures of running Switzerland’s largest telecommunications company and his difficulty disconnecting from work.

Ian Gibbons – Theranos

On May 23, 2013, Gibbons, Theranos’ chief scientist, died by suicide at age 67. His death came amid mounting concerns about the company’s technology and a legal dispute in which he faced being questioned under oath about Theranos’ claims. Read More: Elizabeth Holmes – Theranos (Business Blunders Hall Of Shame)

Jody Sherman – Ecomom

In January 2013, Sherman, founder and CEO of online retailer Ecomom, took his own life at age 47 as the startup struggled financially. His death prompted a broader discussion in Silicon Valley about the extraordinary pressures facing entrepreneurs.

Aaron Swartz – Reddit/JSTOR

On Jan. 11, 2013, Swartz, the 26-year-old internet entrepreneur and early Reddit figure, took his own life while facing federal felony charges for downloading millions of academic articles from JSTOR. His family accused prosecutors of contributing to his death through an aggressive prosecution; federal prosecutors disputed that characterization.

Daniel Pirron – Deloitte

On Aug. 13, 2012, Pirron, a partner in Deloitte’s New York general counsel’s office, took his own life at age 57. At the time, the accounting giant was drawn into a scandal involving Standard Chartered Bank and billions of dollars in transactions tied to Iran. Pirron’s family believed his death was connected to the controversy. Deloitte disputed any connection, saying Pirron had not been involved in its work for Standard Chartered. The following year, Deloitte paid New York $10 million to settle allegations of misconduct and lack of independence in its Standard Chartered work. It also accepted a one-year ban on consulting for state-regulated financial institutions.

Ilya Zhitomirskiy – Diaspora

On Nov. 12, 2011, Zhitomirskiy, the 22-year-old co-founder of social-networking startup Diaspora, took his own life. His death came after Diaspora, a heavily hyped Facebook rival, struggled to live up to expectations.

Don Lapre – Informercial pitchman

On Oct. 2, 2011, Lapre, the late-night infomercial pitchman who promised Americans they could get rich selling vitamins and placing tiny classified ads, took his own life at age 47 He was awaiting trial on 41 federal charges including conspiracy, mail fraud, wire fraud and money laundering. Prosecutors alleged that his vitamin business sold essentially worthless Internet businesses to about 226,000 people, taking in nearly $52 million. Lapre was found dead in his cell two days before his trial. Read More: Don Lapre — The Making Money Show(Business Blunders)

Mark Madoff – Bernard L. Madoff Investment Securities

On Dec. 11, 2010, Madoff, son of Ponzi schemer Bernard Madoff, took his own life at age 46, exactly two years after his father’s arrest. Mark Madoff had turned his father in and was never criminally charged, but spent the next two years facing lawsuits, investigations and public suspicion arising from the massive fraud. Read More: Bernie Madoff – Madoff Securities (Business Blunders Hall Of Shame)

Michael Wise – Silverado Savings & Loan

On April 8, 2009, Wise, the former CEO of Denver’s notorious Silverado Savings & Loan, took his own life at age 64 after losing his job when the mortgage company he worked for shut down amid the financial crisis. Wise had been acquitted of bank-fraud charges stemming from Silverado’s $1 billion collapse, but later served federal prison time for running an unrelated $9 million Ponzi scheme. Read More: Michael Wise — Silverado Savings & Loan (Business Blunders)

René-Thierry Magon de la Villehuchet – Access International Advisors

On Dec. 23, 2008, de la Villehuchet, a French money manager whose Access International Advisors had placed about $1.4 billion of client money with Bernard Madoff, took his own life at age 65 after Madoff’s Ponzi scheme collapsed. He had also reportedly invested substantial personal wealth with Madoff.

Ed Mattar – BestBank of Boulder

On Nov. 2, 2007, Mattar, founder of the failed BestBank of Boulder, took his own life at age 68, hours before he was scheduled to be sentenced on federal bank-fraud charges. Regulators had seized BestBank in 1998 with $135 million in bad loans. Its failure ultimately cost the FDIC more than $200 million and uninsured depositors another $27 million. Read More: A CEO Who Didn’t Do His Time (Business Blunders)

J. Clifford Baxter – Enron

On Jan. 25, 2002, Baxter, a former Enron vice chairman who had raised concerns internally about the company’s questionable transactions, took his own life at age 43 as investigators and Congress examined Enron’s spectacular collapse. Baxter had agreed to testify before congressional investigators. Read More: Enron Was A Parody Of Itself (Business Blunders)

Mace David Howell Jr. – Financier

In 2002, Howell, an Arkansas financier whose investors included Dallas Cowboys owner Jerry Jones, took his own life at age 54 amid the collapse of his investment operation. After his death, about 70 investors reportedly filed claims totaling roughly $80 million as allegations emerged that Howell had operated a Ponzi scheme.

Takashi Uehara – Long-Term Credit Bank of Japan

On May 6, 1999, Uehara, a former vice president of the failed Long-Term Credit Bank of Japan, took his own life at age 59. Prosecutors had questioned him about suspected falsification of the bank’s financial statements and allegedly illegal dividend payments.

Takayuki Kamoshida – Bank of Japan

On May 2, 1998, Kamoshida, a senior Bank of Japan official who led an internal investigation into corruption at the central bank, took his own life at age 58. The inquiry resulted in disciplinary action against scores of employees and criticism of how the investigation had been handled. Kamoshida, who was not accused of corruption himself, reportedly left a note saying, “I’m tired. I’ve reached my limit.”

Shokei Arai – Nikko Securities

On Feb. 19, 1998, Arai, a 50-year-old Japanese lawmaker and former Finance Ministry official, took his own life hours before prosecutors were expected to arrest him over allegations that he had received improper financial benefits from Nikko Securities.

Kuniji Miyazaki – Dai-Ichi Kangyo Bank

On June 29, 1997, Miyazaki, the 61-year-old former president and chairman of Dai-Ichi Kangyo Bank, took his own life as prosecutors investigated billions of yen in questionable loans connected to a corporate racketeer. He reportedly left a note declaring, “I will accomplish my responsibility with my life.”

George “Chip” Wischer – Lincoln Savings & Loan

On June 18, 1995, Wischer, a 46-year-old former executive in Charles Keating’s American Continental empire, took his own life amid the financial and legal fallout from the collapse of Lincoln Savings and Loan. He was among about 100 defendants named in a $1.2 billion investor lawsuit.

Sheldon Weiner – Lincoln Savings & Loan

On June 16, 1995, Weiner, a 41-year-old former American Continental executive, took his own life amid the financial and legal fallout from the collapse of Charles Keating’s savings-and-loan empire. Two days later, fellow former executive George “Chip” Wischer also died by suicide.

John Friedrich – National Safety Council of Australia

On July 26, 1991, Friedrich, who transformed the National Safety Council of Australia’s Victorian division into a sprawling business empire financed by massive borrowing and fraud, took his own life at age 40. He was awaiting trial in what was then one of Australia’s largest corporate fraud cases.

Yaacov Levinson – Bank Hapoalim

On Feb. 23, 1984, Levinson, former chairman of Israel’s Bank Hapoalim, took his own life at age 52 while under investigation over allegedly improper overseas financial transactions. He reportedly wrote that his strength was exhausted and that he could “no longer bear the degradation.”

Alan Saxon – Bullion Reserve of North America

On Sept. 28, 1983, Saxon, head of Bullion Reserve of North America, took his own life at age 39. Investigators were closing in on his collapsing precious-metals business, where tens of millions of dollars belonging to customers were missing. Saxon reportedly acknowledged losing more than $40 million trading commodities.

Giuseppe della Chà – Banco Ambrosiano

On Oct. 1, 1982, della Chà, vice chairman of the collapsed Banco Ambrosiano, took his own life at age 54, less than four months after the deaths of Banco Ambrosiano Chairman Roberto Calvi and his secretary Graziella Corrocher. The bank had collapsed amid revelations of enormous hidden debts and questionable transactions involving offshore companies and the Vatican Bank.

Graziella Teresa Corrocher – Banco Ambrosiano

On June 17, 1982, Corrocher, longtime secretary to Banco Ambrosiano Chairman Roberto Calvi, took her own life at age 55 as one of Italy’s biggest banking scandals engulfed the institution. Calvi had fled Italy as investigators pursued a huge hole in the bank’s finances, and that day the board stripped him of his powers and called in the Bank of Italy. Corrocher left a note condemning Calvi for fleeing and for the damage he had done to employees and the bank. The next morning, Calvi was found dead beneath London’s Blackfriars Bridge. His death, initially treated as suicide, was later determined to be a murder.

Frank Nugan – Nugan Hand Bank

On Jan. 27, 1980, Nugan, co-founder of Australia’s Nugan Hand Bank, took his own life at age 37 as his financial empire began to unravel. The bank subsequently collapsed owing investors tens of millions of dollars and became the subject of one of Australia’s most notorious financial investigations.

Eli Pinkas – Swiss businessman

In 1980, Pinkas, took his own life at age 60 as investigators closed in on his alleged schemes. He was at the center of an international banking scandal involving roughly $140 million in questionable loans. He left a suicide note for his ex-wife urging her to join him. She was later found dead, too.

F. Donald Coster/Philip Musica – McKesson & Robbins

On Dec. 16, 1938, Musica, a convicted swindler who reinvented himself as F. Donald Coster and rose to become president of McKesson & Robbins, took his own life at age 62. Investigators had exposed his true identity and an enormous accounting fraud involving fictitious inventory, sales and receivables.

George E. Cutler – New York Mercantile Exchange

On Nov. 16, 1929, Cutler, a member of the New York Mercantile Exchange, jumped to his death at age 65 after reportedly suffering heavy losses in the stock-market crash. Contrary to popular lore, ruined investors weren't jumping en masse from Wall Street buildings after the crash. But some did die by suicide.

J.J. Riordan – County Trust Co.

On Nov. 8, 1929, Riordan, president of New York’s County Trust Co. and a prominent New York Democrat, took his own life at age 48. He reportedly suffered heavy personal losses in the stock-market crash. The bank delayed announcing his death while its books were examined to reassure depositors that the institution itself remained sound.

C. Fred Stewart – Chicago real estate

On Oct. 25, 1929, Stewart, a Chicago real-estate investor, took his own life at age 49. His death came just one day after Black Thursday amid reports that he had suffered substantial financial losses.

A final note

Rogue trader Jérôme Kerviel lost about $7 billion while employed at Société Générale in one of the largest trading disasters in history.

As his secret trades unraveled in 2008, he contemplated suicide, and came close twice.

In the end, he decided to serve his time and rebuilt his life after prison. Today, he gives presentations about finance, failure and recovery, while continuing to dispute Société Générale’s version of the scandal.

Read More: Jérôme Kerviel – Société Générale (Business Blunders Hall Of Shame)

Blunders happn. Companies fail. Fortunes disappear. Reputations collapse. People go to prison.

Life goes on.

Learn More From Blunder Lists

“If you see fraud and do not say fraud, you are a fraud.” – Nassim Nicholas Taleb

Chinese money-laundering networks service drug traffickers, facilitate fraud and move mountains of questionable cash around the world.

What they need are the services of a reputable bank, and Bank of America has been there to help.

On Tuesday, the U.S. Treasury announced more than $1.21 billion in civil penalties against the nation’s second-largest bank for violations of anti-money laundering laws. This marks the third-largest penalty in Treasury history.

Bank of America admitted that it willfully violated federal anti-money-laundering laws and failed to timely report more than $5 billion in suspicious transactions.

This is no mere record-keeping violation. BOA has been putting national security at risk. Separately, it paid $11.6 million to settle hundreds of apparent sanctions violations involving Russia, Iran, narcotics and terrorism programs.

“The Bank knew for years,” Treasury said in its news release, but “prioritized its revenues.”

The rinse cycle can generate handsome banking fees. Here’s how it works:

• Mexican drug cartels have mountains of illicit dollars in the United States that they need to launder.

• Chinese citizens want dollars outside China but face strict government limits on moving money abroad.

• Chinese money-laundering networks buy the cartels’ dirty dollars and sell them to Chinese customers, sometimes using social media to bring buyers and sellers together.

• The cartel gets its money laundered. Chinese customers get dollars outside China. The middleman gets a cut. And Bank of America was supposed to notice when some of this money came through its vault doors.

FinCEN examined more than 137,000 reports filed by financial institutions from 2020 through 2024 and found some $312 billion in suspicious transactions linked to Chinese networks.

The money moves through shell companies, money mules, trade transactions and sometimes accounts opened with counterfeit Chinese passports. FinCEN even warns that the networks may recruit employees inside banks to help them.

“What would you like the power to do?” goes the slogan at Bank of America.

For some of its worst customers, the answer was apparently: Commit more international crime.

Tour The Business Blunders Hall Of Shame

Above and Beyoncé

No matter how much you loved Beyoncé, there was an eight-ticket limit for her 2023 Renaissance tour finale in Kansas City.

A San Diego scalping company allegedly bought 7,624.

The Justice Department and the Federal Trade Commission sued REPS & Co. on Thursday, alleging it used bots and 1,300 accounts to snap up these tickets and resell them for an estimated $833,000 profit.

Why does it cost more for a concert ticket than your first used car? Parasitic resellers.

According to the feds, REPS spent $1.3 billion buying 18.5 million tickets to more than 83,000 events where it exceeded eight tickets, then made at least $120.8 million reselling them. Employees allegedly used thousands of accounts, virtual credit cards, proxy IP addresses and other tricks to get around ticket limits.

“REPS’ entire business model is focused on trying to game the ticket-purchasing system in order to obtain as many tickets as possible to resell at inflated prices to consumers,” said Christopher Mufarrige, Director of the FTC’s Bureau of Consumer Protection.

And Ticketmaster allegedly knew the song and dance. The FTC is separately suing the ticketing giant, alleging it knew professional brokers routinely blew through ticket limits, and profited when those tickets were resold on its platform.

They don’t call it Ticketbastard for nothing.

Read More: Ticketbastard (Business Blunders)

The Justice Department sued to break up Live Nation and Ticketmaster in 2024. The Trump administration has since settled, but 34 states and Washington D.C. kept fighting. The states won a jury verdict in April finding that the concert giants violated antitrust laws. Now the court is deciding remedies.

“Who run the world?”

Beyoncé sings that it’s girls.

Apparently, it’s ticket brokers.

This Week’s Ponzi

Marco Giovanni Santarelli promised investors a portfolio with something for everyone: e-commerce, real estate, cryptocurrency and Broadway.

The self-described theater lover, touted investments in “A Beautiful Noise,” the Neil Diamond musical; “Broadway Vacation,” based on the Chevy Chase movie franchise; and, “Joy,” a musical about Miracle Mop inventor Joy Mangano, among others.

They say there’s no business like show business, but for the Santarelli’s investors, the show didn’t go on.

Santarelli, 57, of Laguna Niguel, Calif., was sentenced to 33 months in federal prison on Wednesday for running a Ponzi scheme that cost more than 400 investors about $63 million.

Prosecutors say that as the CEO of Norada Capital Management, he lost money, concealed more than $90 million in debt, inflated its assets and eventually used money from new investors to pay earlier ones like all Ponzi schemers do.

The private-equity impresario had promised returns of roughly 12% to 17% from his supposedly diversified portfolio. In the end, he discovered a tried-and-true show business maxim: You can keep the production running only as long as somebody keeps buying tickets.

A simple plan

Hide the losses. Sell the shares. Declare bankruptcy. Meet your cellmate …

Don’t Miss These Blunders

• Pharma Bro Can’t Help Himself Martin Shkreli went to prison. He was also banned from the pharmaceutical industry for life. Regulators say he keeps coming back for another dose.

• Billy McFarland – Fyre Festival Prison didn’t end the party. It was just an intermission.

• Desperately Seeking Diesel When Trump runs low on fuel, it’s ‘Fill ’er up, Vladimir’

• 100 Quadrillion Japanese Dogs Kishu Inu founder Alexander Sisemore allegedly bagged $9 million in a crypto ‘rug pull,’ dumping his secret stash of the meme coins on investors. Will crypto enthusiasts buy anything with a dog on it?

• Jérôme Kerviel – Société Générale He cost his bank billions. But who left the vault door open?

• If the Shoe Doesn’t Fit … Nike Can Wear It What a tech CEO didn’t know: People like to try on shoes before they buy them.

• Don Lapre – The Making Money Show His greatest money-making secret was selling money-making secrets

• Charlie Javice – Frank She was startup wunderkind with student loan website. She gave JPMorgan Chase a $175 million education.

• The Fake Andy Warhols The art was fake. The provenance was fake. Even the email address was fake. Now the dealer is missing.

• Florida Man Takes Cops For A Ride It takes a lot of balls to rip off police. Pension administrator employee Michael D. Williams settles civil fraud charges without admitting or denying the allegations.

• Scamway The granddaddy of multilevel marketing gets stuck with a record $225 million settlement as regulators finally crack down on Amway.

• Catch And Release Kevin Kolenda kept getting caught selling bogus prize insurance. He never stopped casting for suckers.

• The Sins Not Even Trump Can Pardon Nikola founder Trevor Milton got a presidential pardon. It won’t erase the financial consequences of his fraud.

• LIV And Let Die LIV Golf can beg for a mulligan in bankruptcy court. But who wants to invest in a losing game?

• Amazon’s Imaginary Friend Jeff Bezos’ e-commerce giant allegedly invented a bidder to drive up prices. Guess who pays.

• Basketball Or Ballmer Ball? The NBA just suspended Steve Ballmer, its richest team owner, for allegedly making up his own rules.

• No One Yelled Fore Good Good Golf is paying steep price after running, ‘the worst ad known to mankind’ and taking Callaway down with it.

• Jes Staley’s Magic Kindom When Wall Street was melting down, this top JPMorgan executive sought a financial wizard. He turned to his pal, Jeffrey Epstein.

• Flip This NBA Team Billionaire Mark Walter is scrambling to raise billions after his insurance companies reported a $20 billion investment blunder. Now he’s flipping the L.A. Lakers.

• Conrad Black – Hollinger International He inherited a fortune and leveraged it into a global newspaper empire. Then he went to prison for stealing from his own company.

• ‘You Better Find Me Incompetent’ Former Abercrombie & Fitch CEO Michael Jeffries finally faces trial for alleged sex trafficking that began nearly 18 years ago

• A Pump And Dump From Prison David Foley hyped penny stocks and bagged millions while serving a federal prison sentence. Now he’s headed back to the office.

• Boiler Room 2026 Cold calls. Sales scripts. Promises of 1,000% returns. The SEC says an old stock-peddling scam found a new generation of victims.

Martin Shkreli earned the nation’s contempt and the nickname “Pharma Bro” by jacking up the price of a lifesaving drug by more than 5,000%. He went to prison for an unrelated fraud scheme and was banned from the pharmaceutical industry for life.

So what’s the former hedge fund manager do after four years in the pen? He goes right back to being Pharma Bro.

On Tuesday, the Federal Trade Commission and seven states asked a federal judge to hold him in civil contempt, alleging that he has flagrantly violated his court-ordered industry ban.

Regulators say he’s bought and sold shares in at least 60 pharmaceutical companies, analyzed drug trials, promoted his pharma trades to followers and tried to influence companies in which he had stakes.

All of the positions regulators complained about in their motion memorandum were short sales, or bets against a company’s successes.

And he wouldn’t be Pharma Bro if he didn’t shamelessly livestream his moves.

“I’m showing you how to trade and invest in biotech,” he told viewers during one episode regulators cited.

In one video he even acknowledged the obvious: “I know feds are watching.”

Might as well face it, he’s addicted to pharma.

Shkreli, 43, earned his place in the Business Blunders Hall of Shame after becoming perhaps the most reviled pharmaceutical parasite in America.

His company, then known as Turing Pharmaceuticals, bought the rights to Daraprim, a decades-old drug used to treat a potentially deadly parasitic infection, and jacked the price from $13.50 a pill to $750.

In 2016, he was called before Congress for this atrocity and famously smirked his way through the hearing while he invoked the Fifth Amendment.

In 2018, he was sentenced to seven years in prison.

“For years, Shkreli told lie after lie in order to steal his investors’ money, manipulate the stock market and enrich himself,” U.S. Attorney Richard Donoghue said at the time.

Don't Miss These Blunders

In February 2022, a federal court ordered him to pay $64.6 million and barred him from participating in the pharmaceutical industry.

Then in May 2022, Pharma Bro somehow earned an early release for good behavior. And within a couple months, he boldly announced a new venture called Druglike, a Web3 platform designed to help discover drugs.

Druglike was not a drug company. It just had “drug” in its name and helped people discover drugs. Get it?

Regulators, however, are more focused on his trash-talking and his stock trading.

“Shkreli’s ability to move the market with his spoken and written assaults has real consequences for the small biotech companies that are the subject of his short attacks,” regulators said.

One company laid off a third of its employees and another warned that there was “substantial doubt” about its ability to stay in business following Shkreli’s short attacks, according to the memorandum. But there’s an interesting wrinkle: Sometimes Pharma Bro was right.

Yes, he was trash-talking companies he had shorted. No, their stocks didn’t crater just because Martin Shkreli said mean things about them.

But should he have been trading them at all given his lifetime ban? That’s the question.

Regulators are now asking the court to order Shkreli to sell his pharmaceutical holdings and surrender his profits, plus interest. They also want escalating sanctions for future violations that could eventually send him back to the federal farm.

Perhaps we’ve been spelling Pharma Bro incorrectly all these years.

Maybe it’s Farma Bro.

Read more

Tour The Business Blunders Hall Of Shame

Billy McFarland promised the greatest party the world had ever seen.

He delivered cheese sandwiches.

In 2018, a federal judge sentenced him to six years in prison for the fraud behind the spectacularly botched Fyre Festival.

“Billy McFarland has shown a disturbing pattern of deception, which resulted in investors and customers losing over $26 million,” said Manhattan U.S. Attorney Geoffrey Berman following McFarland’s sentence. “Empty promises don’t lead to jet-setting, champagne, and extravagant parties – they lead to federal prison.”

But you can’t stop Billy from being Billy.

While out on pretrial release, McFarland enthusiastically started another business called NYC VIP Access.

It supposedly offered hard-to-get tickets to the Met Gala, Burning Man, Coachella, the Grammys, the Super Bowl and even dinner with LeBron James. Prosecutors said he tried to conceal his role by using employees’ names and bank accounts, and that he collected about $150,000 from at least 30 customers.

No surprise McFarland didn’t actually have the tickets. He was simply applying his sales-over-substance skillset, selling things he could not possibly deliver.

Fyre in the hole

Why let a few legal setbacks obstruct the road to success?

After serving four years in the pen, McFarland tried to resurrect Fyre Festival. He sold the Fyre name on eBay, staged new events on Caribbean islands, jumped into real estate development and recently promised another project with “a budget bigger than Fyre 1.”

On Sept. 28, 2026, McFarland walked onto the stage at Joe Rogan’s Comedy Mothership in Austin for his first stand-up comedy appearance. It was recorded for the Kill Tony podcast.

The audience initially booed him. Someone shouted an obscenity. But McFarland pushed forward and reportedly won over some of the crowd.

“My name is Billy McFarland, and yes, I am the creator of Fyre Festival. Relax, guys. If I organize this, you’d still be stuck at the fucking airport.”

He was already a hit as the subject of dueling documentaries: Netflix, “FYRE: The Greatest Party That Never Happened,” and Hulu, “Fyre Fraud.” But his entertainment career has a long way to go before he’ll be able to repay the $26 million he owes investors and customers.

The documentaries showed Fyre Festival guests riding in school buses, sleeping on bare mattresses in storm-damaged tents, and eating cheese sandwiches from foam containers.

They had paid small fortunes for a luxury music event on a Bahamian island. They got a couple slices of white bread with cheese in between them.

Somehow after this five-star debacle, there were no sentencing requirements that would have prevented McFarland from selling tickets to another dubious event.

In early 2025, he began selling tickets for Fyre 2. He billed it as a three-day event at Isla Mujeres off the coast of Cancun, Mexico, from May 30 through June 2, 2025.

Read More: All Fyred Up Again (Business Blunders)

Here’s how he explained his do-over in a press release:

“I’m sure many people think I’m crazy for doing this again. But I feel I’d be crazy not to do it again. After years of reflection and now thoughtful planning, the new team and I have amazing plans for Fyre 2. The adventure seekers who trust the vision and take the leap will make history. Thank you to my partners for the second chance.”

Mexican tourism officials said they knew nothing about it. Local authorities questioned whether the necessary permits existed.

So surprise, surprise – Fyre 2 never happened.

Fyre sale

After the Fyre 2 flop, McFarland announced that Fyre itself was for sale. Here’s what he wrote the festival’s Instagram page:

“After two years of rebuilding FYRE with honesty, creativity, and relentless effort, it’s time to pass the torch. We’re officially putting the FYRE brand up for sale. To the right buyer: the platform is yours. Execute the vision. Make history.”

McFarland likes to tell customers they can “make history” by buying into his big ideas. So far, he’s the one making history … as a shameless huckster.

LimeWire bought Fyre’s trademarks, intellectual property and social-media assets in July 2025 for $245,300 after an auction attracted 175 bids from 42 bidders. It was a fraction of the $1.1 million price McFarland had once offered for a single Fyre 2 ticket package.

Don't Miss These Blunders

After the sale, McFarland had no name for his next festival and a bad name for himself, but why should the party end there?

In December 2025, he somehow pulled off a music festival in Honduras, dubbed PHNX. This time he indeed had artists, fans, bathrooms and at least something that resembled food.

McFarland said about 420 people attended. Other accounts described smaller crowds, with locals reportedly admitted free.

It wasn’t exactly a phoenix rising from the ashes. But the fact that the festival actually happened seemed to have constituted progress.

On to the next thing

Now McFarland heads BZM, a company that carries his initials and says it operates where “culture, media, and real assets meet.”

In June 2026, BZM staged a three-day event in Turks and Caicos featuring Skillibeng, Bobby Shmurda and Destra Garcia. The following month, the company says it provided the headline talent for Utila Carnival, which it says drew more than 10,000 people.

He described his experience on the comedy stage:

“Recently, I went back to this little island called Utila Honduras to do another fucking festival. Everybody told me I didn’t learn any lessons, and I’m here to say, that’s bullshit. First, I learned how to apologize in Spanish.”

Asked how much tickets to the Utila event cost, he replied: “I still owe 26 million. So not enough, right?”

BZM is also promoting real-estate development in Utila. “We find the places nobody has discovered yet, buy land, bring culture in, and watch the world follow,” goes the pitch.

Cheese sandwich, anyone?

Some people learn from blunders. McFarland pads the budget for them. And now he’s got a product he may actually be able to deliver: Punchlines about himself.

“I see all these great comedians. They bust their ass for 20 years to beg for a Netflix special. I only had to serve four, so I guess I’m doing something, right?”

Tour The Business Blunders Hall Of Shame

“A friend of the devil is a friend of mine.” – Grateful Dead.

President Donald Trump is standing outside the Kremlin with an empty gas can.

Since unilaterally starting a war with Iran and failing to keep open the Strait of Hormuz, diesel has soared to more than $6 a gallon.

The U.S. economy runs on diesel, from the tractors that cultivate our food to the trucks that deliver just about everything we buy. Diesel was $3.76 a gallon before the Iran war, according to AAA. Now its steep rise guarantees that Trumpflation will keep getting delivered by the truckload.

Forget the midterm elections. The economic situation is so dire that Trump has run to one of the few leaders in the world who might pretend to help him.

On Friday, Trump announced that Russia would put millions of tons of diesel onto the market. The Treasury Department, meanwhile, loosened restrictions so all that Russian fuel could find buyers.

The U.S. and its allies have spent years sanctioning Russian oil to thwart Putin’s unilaterally declared war on Ukraine.

Volodymyr Zelenskyy is furious, particularly as Russian attacks continue killing civilians and their children in the nation that he leads through an unprovoked war.

So now Russia gets more money to fuel its atrocities against Ukraine and possibly ramp up its continued aggression against our European allies. And we get … diesel prices that aren’t likely to drop any time soon.

Farmers eating record diesel costs and sharply higher fertilizer prices should be able to recognize Trump’s move: It’s called moving the manure around in the barnyard.

“It just means that the oil is just going to be shuffled around and it’s not really going to change the price globally or across the U.S.,” Michael Lynch, distinguished fellow at Energy Policy Research Foundation, told the Associated Press.

The latest U.S. Energy Information Administration forecast, completed before Trump announced his Russian rescue plan, expects diesel to remain above $6 through October. With inventories well below normal Russia’s diesel clearance sale isn’t likely to curb that assessment.

Then there’s Clayton Seigle, an energy strategist and expert at the Center for Strategic and International Studies. He told the AP that Russia needs to offload its summer-gradediesel anyway. Russian refineries need to clear their pipes for the heavier winter and arctic grades that will be in hot demand soon.

So Putin isn’t so much filling Trump’s gas can. He’s cleaning out his garage.

A lousy cut

Former TD Bank employee Gerardo Aquino pleaded guilty to taking bribes to help conspirators launder $4.8 million to Colombia.

Prosecutors say Aquino, 40, of Hollywood, Fla., opened 86 customer accounts using the same Miami address, issued hundreds of debit cards and even unblocked cards the bank had flagged for suspected fraud.

His take for helping move all that money: A little more than $8,000.

And get this: Aquino’s plea comes almost exactly two years after TD Bank itself pleaded guilty to similar criminal charges. But unlike Aquino, who faces up to 20 years in prison, no senior TD Bank executive ended up in the pokey.

Crime doesn’t pay, but when you’re in the corner offices, banking has its privileges.

Blunders: The sequels

Two memorable schemes recently chronicled here in Business Blunders caught up with their perpetrators this week.

Remember the guy who allegedly stole $53 million in crypto and blew some of it on Pokémon cards?

A Manhattan federal jury convicted cybersecurity consultant Jonathan Spalletta, 36, of Rockville, Md., on Wednesday of fraud and money laundering in the 2021 Uranium Finance heist.

Read More: Steal Crypto, Buy Pokémon (Business Blunders)

“Crypto is all fake internet money anyway,” Jonathan Spalletta, 36, told a friend as he explained his heist, according to the indictment.

It wasn’t a compelling defense. Jurors deliberated for just two hours.

P.S. It may sound stupid to risk prison for Pikachu, but some Pokémon cards are commanding record prices, including the sale of one card for $16.5 million ealier this year.

And on another front …

Music man Michael Smith, was sentenced Tuesday to 18 months in federal prison. Smith is a North Carolina musician who was accused of using bots to play AI-generated songs billions of times.

Read More: The Music Man (Business Blunders)

Smith admitted the scheme generated more than $8 million in fraudulent royalties. His bogus bot tunes played on Amazon Music, Apple Music, Spotify, YouTube Music and other streaming platforms.

Now he’s facing the music.

Don’t Miss These Blunders

• 100 Quadrillion Japanese Dogs Kishu Inu founder Alexander Sisemore allegedly bagged $9 million in a crypto ‘rug pull,’ dumping his secret stash of the meme coins on investors. Will crypto enthusiasts buy anything with a dog on it?

• Jérôme Kerviel – Société Générale He cost his bank billions. But who left the vault door open?

• If the Shoe Doesn’t Fit … Nike Can Wear It What a tech CEO didn’t know: People like to try on shoes before they buy them.

• Don Lapre – The Making Money Show His greatest money-making secret was selling money-making secrets

• Charlie Javice – Frank She was startup wunderkind with student loan website. She gave JPMorgan Chase a $175 million education.

• The Fake Andy Warhols The art was fake. The provenance was fake. Even the email address was fake. Now the dealer is missing.

• Florida Man Takes Cops For A Ride It takes a lot of balls to rip off police. Pension administrator employee Michael D. Williams settles civil fraud charges without admitting or denying the allegations.

• Scamway The granddaddy of multilevel marketing gets stuck with a record $225 million settlement as regulators finally crack down on Amway.

• Catch And Release Kevin Kolenda kept getting caught selling bogus prize insurance. He never stopped casting for suckers.

• The Sins Not Even Trump Can Pardon Nikola founder Trevor Milton got a presidential pardon. It won’t erase the financial consequences of his fraud.

• LIV And Let Die LIV Golf can beg for a mulligan in bankruptcy court. But who wants to invest in a losing game?

• Amazon’s Imaginary Friend Jeff Bezos’ e-commerce giant allegedly invented a bidder to drive up prices. Guess who pays.

• Basketball Or Ballmer Ball? The NBA just suspended Steve Ballmer, its richest team owner, for allegedly making up his own rules.

• No One Yelled Fore Good Good Golf is paying steep price after running, ‘the worst ad known to mankind’ and taking Callaway down with it.

• Jes Staley’s Magic Kindom When Wall Street was melting down, this top JPMorgan executive sought a financial wizard. He turned to his pal, Jeffrey Epstein.

• Flip This NBA Team Billionaire Mark Walter is scrambling to raise billions after his insurance companies reported a $20 billion investment blunder. Now he’s flipping the L.A. Lakers.

• Conrad Black – Hollinger International He inherited a fortune and leveraged it into a global newspaper empire. Then he went to prison for stealing from his own company.

• ‘You Better Find Me Incompetent’ Former Abercrombie & Fitch CEO Michael Jeffries finally faces trial for alleged sex trafficking that began nearly 18 years ago

• A Pump And Dump From Prison David Foley hyped penny stocks and bagged millions while serving a federal prison sentence. Now he’s headed back to the office.

• Boiler Room 2026 Cold calls. Sales scripts. Promises of 1,000% returns. The SEC says an old stock-peddling scam found a new generation of victims.

• Michael ‘Mickey’ Monus – Phar-Mor He played doctor with the books. His pharmacy chain kept bleeding.

• Ed Mattar – BestBank Of Boulder He was a lifelong deadbeat. Somehow he got his hands on a state-chartered bank.

• The Luigi Effect Luigi Mangione has changed corporate security. CEOs may never feel safe again.

• NFT Monkey Business Venture capitalists bet millions on a startup promising to build an exchange for cartoon apes. Prosecutors say founder Taj Tarsha blew investor funds on gambling and his DJ career.

• Confessions Of An FBI Crypto Thief Prosecutors say agent Patrick Yaroch raided digital wallets. Then his conscience blew his cover.

• Leaky Pants First came explosive diarrhea. Then came allegations of a $32 million inside job. It’s been one crappy summer for Taylor Farms.

• How To Lose An Internet Fight eBay executives tried to silence a newsletter. It cost them tens of millions of dollars, seven criminal convictions, and one of the worst public-relations disasters in Silicon Valley history.

• Another Billion-Dollar Bedtime Story Silicon Valley bet big on yet another young prodigy. Now they’re waking up to reality ... again.

• Blowing Sunshine Jay Lucas preached positivity while looting his $50 million private equity fund

• AI Gets A Performance Review Engineers discover it cheats better than humans ... and doesn’t feel a shred of guilt.

• The Nigerian Prince Goes Corporate A former Morgan Stanley broker allegedly gave the classic scam a Wall Street makeover

Crypto entrepreneur Alexander Sisemore created 100 quadrillion Kishu Inu meme coins.

I’m not good at astrophysics, or typing zeros, but I believe that’s 100,000,000,000,000,000 of dog-themed digital tokens.

At their peak, they traded for a millionth or two of a penny. I’m not good at quantum phsyics either, but that micro-fraction multipled by 100 quadrillion amounted to a whopping $1.6 billion market valuation.

That means for just a few bucks, you could be a Kishu Inu millionaire or even a Kishu Inu billionaire. And what if this “digital asset” skyrocketed in value to a full penny?

Woof!

You’d be in doggie heaven. And if turned out you were barking up the wrong tree … Well, at least got a cute cartoon Japanese dog for your money.

Sound like fun? Just like Beanie Babies, but without the plastic beans.

On Wednesday, federal prosecutors announced wire fraud charges against Sisemore, 28, of Fayetteville, Ark., in what they termed a “rug pull.” In crypto parlance, that’s when insiders hype a token, draw in buyers, then cash out, leaving everyone else holding an empty digital bag.

“Kishu man” and “Kimbo,” as Sisemore is more widely known, plans to fight the charges, his attorney told The Chicago Tribune. Meantime, Kimbo hangs in limbo as he faces up to 20 years in prison if convicted.

Don't Miss These Blunders

The criminal complaint alleges that he pocketed $9 million in personal profits with his undisclosed holdings of Kishu Inu. The website on which the token was launched, kishu.finance, claimed there were no such holdings:

“Kishu Inu was fair-launched, and the dev team has no ‘team tokens’. In other words, our creators had to purchase $KISHU on the open-market.”

Kishu Inu launched in April 2021, during the Dogecoin craze. The Dodgecoin, which featured a Shiba Inu, launched as a joke to highlight the absurdity of meme coins. But the joke landed.

Dogecoin once soared to more than 73 cents and still trades for nearly 9 cents. Kishu Inu still trades, too, for about 0.00000000008 cents, assuming I accurately typed all the zeros. (Got a pooper scooper? Here’s a link to its whitepaper.)

Tour The Business Blunders Hall Of Shame

In years past, penny stock brokers pulled similar schemes, but penny stocks were worth at least a penny. Plus, these charlatans had to open an office, buy some used office furniture, set up a few phones and a fax machine, and then hire gaggle of cold-calling slicksters to peddle their worthless shares.

With blockchain technology and some clever digital marketing, fraudsters can get so much more out of unwary investors.

All they need is a stinky bag of digital doggie-do.

Read more

Tour The Business Blunders Hall Of Shame

Banks spend millions on risk controls, compliance departments and computer security. Then every so often, they hand a young trader the keys to the vault and act surprised when the money disappears.

Jérôme Kerviel wasn’t the world’s first rogue trader, and despite the costly lessons of his spectacular folly, he would not be the last.

In January 2008, managers at French banking giant Société Générale discovered that Kerviel had placed €50 billion in unauthorized trades. After the bank unwound them, it had lost €4.9 billion, or about $7 billion. It was the largest rogue-trading loss ever blamed on a single employee.

For 13 years, another rogue trader, Nick Leeson at Britain’s Barings Bank, had held this dubious record. Then came Jérôme Kerviel whose record still stands.

Read More: Nick Leeson – Barings Bank (Business Blunders Hall Of Shame)

Like Leeson before him, it was yet another case of doubling down to avoid admitting failure. But at least he meant well. Or so he claimed.

“I had several motivations in making those orders, but first and foremost I had in mind to make money for the bank,” Kerviel told investigators, according to The New Yorker.

Back-office education

Kerviel, who was born in the Brittany region of France, joined Société Générale in 2000. He was 31 when the scandal first broke.

Kerviel earned a master’s degree in finance from Lumière University Lyon 2. He started in the bank’s middle office, where he learned how trades were processed and monitored.

He moved onto the trading floor and began making increasingly large unauthorized bets on European stock indexes. To hide his exposure, he entered fictitious offsetting trades into the bank’s systems, making his positions appear hedged when they weren’t.

By 2007, the strategy had become astonishingly successful. Kerviel generated about €1.4 billion in hidden profits that year.

Had the trades been legitimate, Kerviel could have taken a bow for this massive success, and he might have been handsomely rewarded. But he wasn’t supposed to be making bets like these. His job was largely arbitrage, or exploiting small price discrepancies with offsetting trades, not wagering billions on which way the market would move.

Red lights flashing

By January 2008, Kerviel had accumulated about €50 billion in positions, according to Société Générale’s account of the case. That was more than all of the bank’s shareholders’ equity at the time.

The bank said Kerviel fictitious transactions, false explanations and forged documents defeated its controls.

His trading, however, did generate warnings that went ignored.

Société Générale’s risk-control staff repeatedly flagged Kerviel’s trades, and in November 2007 the Eurex derivatives exchange contacted the bank about unusually large positions.

Somehow, it wasn’t a problem as long as the world’s stock markets were going up. Only when they began to collapse in a global financial crisis did bank officials finally confront Kerviel

In January 2008, the enormity of his predicament hit him.

“I don’t know if I’m going to come back or throw myself under a train,” he wrote in a text message as bank officials tried to reach him, according to a detailed 2008 New Yorker account.

Tallying the damage

Société Générale began liquidating Kerviel’s positions on Jan. 21, 2008.

The timing was terrible. By the time the bank finished unwinding the positions, it had suffered a €4.9 billion loss.

Kerviel instantly became one of the world’s most infamous traders.

His defense was essentially this: Yes, he broke the rules, but his superiors knew, or should have known, what he was doing.

A French court didn’t buy it.

On Oct. 5, 2010, Kerviel was convicted of breach of trust, forgery and unauthorized use of the bank’s computer systems. He was sentenced to five years in prison, with two suspended. The court also ordered him to repay €4.9 billion.

Courtroom spectators gasped at the size of the judgement, The Guardian reported. It was a bit like asking a kid with a Kool-Aid stand to pay off the national debt.

“I don’t know how I’m going to manage,” Kerviel said after the verdict. “I’m going to have to find a job that pays €100,000 a month for the next 4,000 years.”

A bullet in the head

An appeals court upheld Kerviel’s conviction and the whopping €4.9 billion judgment in 2012.

“What happened today is a call for me to put a bullet in my head,” he said, although he immediately added he did not intend to kill himself, according to the Associated Press.

Later though, in a 2025 interview, he said he’d come close to suicide twice, once with a gun and once with his belt while incarcerated. During one of those episodes, he said, a telephone call from his ailing mother interrupted him.

The isolation of prison compounded his despair, but then a miracle happened.

France’s highest court upheld Kerviel’s criminal conviction in 2014, but it threw out the €4.9 billion damages award. He was going to be free, at least of this intractable debt burden.

It turns out, Société Générale’s own shortcomings weren’t taken into account, the higher court ruled. Yes, Kerviel was guilty. But the bank was hardly blameless.

Banks are seldom blameless in these massive debacles.

Four years after Kerviel’s folly, JPMorgan suffered its own trading disaster. In 2012, trader Bruno Iksil, a.k.a the “London Whale,” and his colleagues made enormous derivatives bets that spiraled out of control, costing the bank $6.2 billion.

Regulators later faulted the bank for failures in risk management and internal controls, raising the same question left in the wake of the Leeson and Kerviel debacles: How could a major bank let trading risks this enormous grow without adequate oversight?

In 2016, a Versailles appeals court put a new price on Kerviel’s liability: €1 million. Kerviel had gone from owing one of the largest financial judgments imaginable to owing 0.02% of it.

After prison, he took to the one career many white-collar convicts find lucrative: He began appearing before business audiences as a speaker, leveraging the catastrophe that destroyed his banking career.

“J’étais un gros connard …” he said in a December 2024 interview.

Translation: “I was a huge asshole who didn’t realize what he was doing at the time.”

In 2026, he was still giving presentations on finance, corporate pressure, personal responsibility, failure and recovery.

To this day, he disputes Société Générale’s version of the scandal and continues fighting to overturn his conviction. But nearly two decades later, he remains a key figure in the rogue-trader pantheon.

“I’ve acknowledged my mistakes,” he said in a 2025 interview, “but I don’t want to bear alone the excesses of an entire system.”

Tour The Business Blunders Hall Of Shame

“This one goes to 11.” – Nigel Tufnel, “This is Spinal Tap.”

The board of directors at Nike decided to put a tech guy in charge of its iconic athletic-shoe business in 2020.

John Donahoe was one of those professional management types that boards think can master any industry. He’d run Bain & Co. He’d also served as CEO of eBay and ServiceNow and chairman of PayPal.

He had a great idea: Let’s dump some of those third-party retailers selling our shoes. Let’s zap Zappos! Let’s ditch Dillard’s! Let’s deep-six Big 5 Sporting Goods!

“We are in the privileged position of being in consumers’ pockets and on their home screens or their phones,” Donahoe gushed on a June 2023 conference call. “That’s cherished real estate.”

Never mind that everybody else was in everybody’s pockets, too. Nike was giving up a different kind of cherished real estate: shelves in stores where people could actually try on its shoes.

Yes, it was the great digital transformation. And the company named after the Greek goddess of victory has been delivering shareholder losses ever since.

Nike shares have lost nearly half their value this year. At about $34, the stock is scraping 12-year lows and has plunged roughly 80% from its 2021 peak.

Nike decided to “retire” Donahoe, effective October 2024, replacing him with company veteran Elliott Hill.

Hill has spent the past two years trying to rebuild Nike and restoring many of the retail relationships that his digitally minded predecessor decided didn’t matter.

To be sure, Nike made plenty of other missteps under Donahoe. It lost footing in China, leaned too heavily on aging franchises such as Dunks and Air Force 1s, and let upstarts such as Hoka and On eat into its market share. But deliberately walking away from retailers that had spent decades selling Nike shoes was the kind of disruption tech guys brag about without considering the consequences.

Donahoe thought Nike could sell more shoes by controlling the customer relationship itself. What he underestimated was what those supposedly unnecessary middlemen actually did: They put shoes on people’s feet.

Nike’s board might as well have hired a self-absorbed dope like Nigel Tufnel, the lead guitarist in Rob Reiner’s classic rock mockumentary, “This Is Spinal Tap.”

Asked what he might do if he weren’t such a big rock star, Nigel said he could be a salesman. He imagines asking a customer his size, checking whether the store has it and, failing that, offering him something else.

The scene goes like this:

Nigel Tufnel: A salesman, like maybe in a, uh, haberdasher, or maybe like a, uh, um... a chapeau shop or something. You know, like, “Would you... what size do you wear, sir?” And then you answer me.

Marty DiBergi: Uh... seven and a quarter.

Nigel Tufnel: ‘I think we have that.’ See, something like that I could do.

Marty DiBergi: Yeah... you think you’d be happy doing something like-...

Nigel Tufnel: ‘No; we’re all out. Do you wear black?’ See, that sort of thing I think I could probably... muster up.

Marty DiBergi: Do you think you’d be happy doing that?

Nigel Tufnel: Well, I don’t know - wh-wh-... what’re the hours?

Nigel Tufnel didn’t want to work too hard, but at least he understood something Nike’s highly paid management consultants, technologists and directors somehow missed.

Shoes can be hard to fit, especially for athletics. And who loves shipping them back when they don’t?

How not to get rich quick: Dial 900

He sold the American dream on late-night cable TV informercials. It ended in a nightmare. Please welcome Don Lapre to The Business Blunders Hall Of Shame.

Tour The Business Blunders Hall Of Shame

A con artist in the can

A quick update on last week’s post about The Fake Andy Warhols: Miami art dealer Leslie Roberts’ 15 minutes of Andy Warhol fame has now resulted in nearly four years in prison.

A federal judge sentenced Roberts on Friday for selling fake Warhol paintings and ordered him taken into custody immediately. Roberts had failed to show up for his original sentencing a week earlier.

The exhibition is now closed.

Public assistance for bankers

Nobody called Dubya a socialist, but what else can you call this massive redistribution of wealth? Public assistance should be reserved for the needy, not the greedy.

Don’t Miss These Blunders

• Charlie Javice – Frank She was startup wunderkind with student loan website. She gave JPMorgan Chase a $175 million education.

• Florida Man Takes Cops For A Ride It takes a lot of balls to rip off police. Pension administrator employee Michael D. Williams settles civil fraud charges without admitting or denying the allegations.

• Scamway The granddaddy of multilevel marketing gets stuck with a record $225 million settlement as regulators finally crack down on Amway.

• Catch And Release Kevin Kolenda kept getting caught selling bogus prize insurance. He never stopped casting for suckers.

• The Sins Not Even Trump Can Pardon Nikola founder Trevor Milton got a presidential pardon. It won’t erase the financial consequences of his fraud.

• LIV And Let Die LIV Golf can beg for a mulligan in bankruptcy court. But who wants to invest in a losing game?

• Amazon’s Imaginary Friend Jeff Bezos’ e-commerce giant allegedly invented a bidder to drive up prices. Guess who pays.

• Basketball Or Ballmer Ball? The NBA just suspended Steve Ballmer, its richest team owner, for allegedly making up his own rules.

Tour The Business Blunders Hall Of Shame

Channel-surfing insomniacs in the 1990s often landed on The Making Money Show With Don Lapre, a half-hour infomercial selling America on a dream.

Lapre was a young man who claimed to hold the secret to riches, and for $40 he’d share it with you.

His Making Money Secrets package came with tapes and booklets explaining how to make money from home, including Lapre’s favorite formula: tiny classified ads and 900 numbers.

The idea was simple. Lapre’s company could sell you a pay-per-minute phone line offering sports picks, psychic readings, dating or chat services.

You didn’t have to produce the schlocky content for these phone lines. Your job was to place tiny classified ads persuading people to call your number. When they did, you got a cut of the charges.

Lapre claimed he’d used the formula to go from a one-bedroom apartment to making $50,000 a week.

Did anybody wonder why a guy banking this much cash couldn’t pay for his own damn classified ads?

Leveraging the miracle of salesmanship over substance, the show ranked among the 10 most frequently broadcast cable infomercials in the nation.

And Lapre’s $40 package was only the beginning.

Once customers bought it, Lapre’s salespeople called them with offers for 900-number businesses and other services. Lapre acknowledged in 1995 that his company couldn’t survive by just selling introductory packages.

One former salesman later offered a blunter description.

“Most of the crap in there isn’t information on how to run a business,” Elliot Storch told Phoenix New Times. “It’s basically for giving you a number to call Don so he can sell you something else.”

By 1996, another former employee said, Lapre’s companies were taking in as much as $1.6 million a week, and spending at least $600,000 a week to keep Lapre on television.

The Making Money Show was aptly named.

Don Lapre was making money.

The making of a money maker

Lapre was born in Providence, R.I. and grew up poor in Sunnyslope, Ariz.

His mother worked at a convenience store. His father had a house-painting business and was laid up for two years with a bad back. Lapre said he scavenged discarded furniture from alleys and sold it at the Park ‘N’ Swap to help the family. He dropped out of high school to help make ends meet and worked in his father’s painting business.

Don't Miss These Blunders

In 1988, he started the 1828 Club, a dating service for young adults. Within months, he filed for Chapter 7 bankruptcy.

That same year, Lapre married Sally Redondo, who would become the mother of their two children, and in 1990 the couple launched another venture, Unknown Concepts, offering credit repair.

The company promised access to credit cards, loans and discount vacations for $37. What customers got was information about companies that might provide these things … Yeah, might. And for $37, you can read all about it.

Arizona’s attorney general sued Lapre and his wife under the state’s Consumer Fraud Act. The couple was barred from operating credit-service organizations and ordered to pay civil penalties and more than $5,000 in restitution.

No worries.

On to the next thing

Next, Lapre wrote a 36-page booklet telling homeowners how to recover certain Federal Housing Administration insurance refunds after paying off their mortgages.

It reportedly cost about 60 cents to produce. Lapre sold it for $85 through an advertisement in a local newspaper.

It was successful enough to raise money for Lapre’s next big thing after a friend introduced him to the wonders of the 900 number. Callers to these telephone lines paid as much as $2.99 a minute.

Lapre placed some 1,100 advertisements in newspapers around the country directing people to call.

That’s when Lapre realized there might be an even better business than making money from classified ads. He could sell the idea itself.

But wait, there’s more!

In 1992, Lapre took his pitch to television.

The Making Money Show offered an introductory package cheaply enough to attract a mass audience. But the $40 kit was only the beginning.

Customers could subsequently be pitched much more expensive 900-number businesses involving psychic lines, sports information, dating and entertainment. The Phoenix New Times reported that customers could wind up spending about $850.

By 1994, Lapre claimed his “Making Money” operation was generating $40 million per year.

That was the claim, anyway. Too bad his customers weren’t getting anywhere near this rich.

Complaints accumulated over additional charges, refunds and the difficulty of actually earning the riches Lapre promised.

Nevertheless, Lapre kept moving. He launched reminder services. He opened retail stores. He moved onto the Internet. He invested millions in a Mexican real-estate development.

Then, in 1999, his money-making machine ran dry.

Lapre’s business empire filed for Chapter 11 bankruptcy protection, listing about $9 million in assets and $12.5 million in liabilities.

“I fail at more things than anyone I’ve ever met,” he told Phoenix New Times. “But I try more things than anyone I’ve ever met. I’m a good loser.”

The Greatest Vitamin in the World

In the 2000s, Lapre returned to television with what he dubbed, “The Greatest Vitamin in the World.”

Lapre offered people an opportunity to make money selling this magic pill over the Internet. Participants bought websites and advertising and were told they could earn commissions when customers purchased vitamins.

“You get just 20 people to try the greatest vitamin in the world, we will send you a check for a thousand dollars,” ” Lapre promised in an infomercial.

CBS News examined the operation in 2004 and found customers who had spent thousands of dollars buying websites and advertising earned little or nothing.

The Food and Drug Administration also warned Lapre’s company over claims suggesting the supplement could address conditions including diabetes, stroke, heart disease, insomnia, cancer and arthritis. The FDA sent another warning in 2006.

Federal prosecutors eventually became much more interested in an Lapre’s associated scheme of selling vitamin-hawking websites.

Prosecutors alleged that from 2004 through 2007, Lapre sold essentially worthless Internet businesses to about 226,000 people. They alleged that he hauled in nearly $52 million with this scheme.

In June 2011, a federal grand jury in Phoenix indicted Lapre on 41 counts including conspiracy, mail fraud, wire fraud and money laundering.

According to prosecutors, participants were encouraged to spend money on websites and advertising with the expectation that vitamin sales would generate commissions. Prosecutors alleged that Lapre supplied false sales records that made it appear the businesses were succeeding and encouraged customers to buy still more advertising and services.

Lapre denied the fraud:

“I tried to create the best product on earth,” he wrote on his website, “paid out millions, made very little trying to make it a success, had attorneys review my entire company, paid out millions in refunds, tried to make the commission and products better every single year, and in spite of all that, I have been accused of something I did not do.”

Lapre failed to appear for his June 2011 arraignment. U.S. marshals found him the following day hiding at a fitness center in Tempe, Arizona, suffering from self-inflicted wounds.

His trial was scheduled to begin Oct. 4, 2011 but on Oct. 2 of that year, he was found dead in his cell at the Central Arizona Detention Center in Florence.

His death at 47 was ruled a suicide.

All in fun

Lapre never stood trial on the federal charges and was never convicted of them. His death left prosecutors’ allegations untested.

At one point, Lapre had offered a fitting description of his approach to business.

“I just want to have fun creating ideas and selling them,” he told Phoenix New Times. “I wish I had a big ego, but I really don’t give a rat’s ass about what people think about me.”

His legacy remains as a two-decade trail of get-rich promises, customer complaints, regulatory problems, two bankruptcies and a 41-count federal indictment.

Plus at least one important lesson for insomniacs watching late-night television:

Selling the American dream is a lot more lucrative than buying it.

Tour The Business Blunders Hall Of Shame

Tour The Business Blunders Hall Of Shame

Is it legal to create data for millions of customers who don’t exist? A concerned employee wanted to know.

The boss had an answer: “We don’t want to end up in orange jumpsuits.”

Yet that’s exactly where Charlie Javice was headed.

In 2021, Javice was a twenty-something entrepreneur prepping to sell her startup to JPMorgan Chase. It was a website she called Frank that helped students fill out financial aid forms. She fabricated Frank’s most important asset – data supposedly representing millions of customers. Then she sold the company to the nation’s largest bank for $175 million.

A jury convicted her of fraud on March 28, 2025 and a judge sentenced her to more than seven years in prison on Sept. 29, 2025.

Pending her appeal, Javice remains free on a $2 million bond. Her lawyers told the court she was teaching Pilates in South Florida. They argued that her court-ordered ankle bracelet interfered with her ability to teach, but the court decided to keep the cuff.

Meantime, JPMorgan keeps paying tens of millions in legal expenses for her defense after a judge ruled the contract it signed when it bought Frank requires the firm to indemnify her and her co-defendant, Frank executive Olivier Amar, 52.

At last count, those expenses were approaching $150 million, getting closer to the whopping sum JP Morgan paid for Frank.

In addition to pursuing her appeal, Javice is reportedly seeking a pardon from President Donald Trump.

Read More:

• JPMorgan Chumps (Business Blunders)

• JPMorgan Can Check Their Butts (Business Blunders)

Don't Miss These Blunders

Advance praise

Javice was born and raised in New York’s Westchester County. Her father worked at a hedge fund. Her mother worked as a teacher and later as a life coach.

She attended the private French-American School of New York and graduated from the Wharton School of the University of Pennsylvania in 2013 with a degree in finance and legal studies.

She was an entrepreneur before she was old enough to drink. At 17, she launched PoverUp, a microfinance venture that she said would help fight global poverty. She claimed PoverUp had attracted 5,000 registrations within hours of launching its beta version and more than 12,000 within a month.

At 19, Fast Company named her one of its 100 Most Creative People in Business. Creative indeed. And Inc. named PoverUp one of America’s coolest college startups.

At 24, Javice founded Frank to help students navigate the maddening process of applying for federal financial aid.

The accolades kept coming after its 2016 launch.

In 2018, Forbes published a glowing profile headlined, “This 26-Year-Old CEO Found Students $7 Billion In Financial Aid.” It was Javice who supplied the $7 billion figure.

In 2019, Crain’s New York Business put Javice on its 40 Under 40 list, and Forbes put her on its 30 Under 30 list.

Read More: Making A List, Checking It Twice

Javice made repeated appearances on business TV shows. She drew attention in New York’s startup circles. Wealthy investors backed her. Marc Rowan, co-founder of Apollo Global Management, invested in Frank. Israeli venture capitalist Michael Eisenberg became an early backer, too.

By the time JPMorgan Chase came calling, Javice had been celebrated as some kind of wunderkind for more than a decade.

Today, she draws comparisons to another young entrepreneur whom investors once deemed a wunderkind: Theranos founder Elizabeth Holmes, who faked results of the blood-test device she was developing. Both built glamorous reputations around startups and then were convicted of defrauding sophisticated investors or business partners.

Fake it till you make it

Javice lived up to her billing as creative, maintaining Frank as an imaginative business growth story.

She claimed it had about 4.25 million users. And JPMorgan Chase coveted all those young customers, figuring it could eventually sell them bank accounts, credit cards and other financial services when they graduated from college. But the firm wanted to verify the numbers before closing the deal, and truth be told, Frank had fewer than 300,000 users.

That’s when Javice and Amar asked the company’s engineering director to create a synthetic data set representing millions of users. The engineering director questioned whether such a move was legal and refused to do it, according to the criminal complaint.

Javice then hired an outside data scientist, who created millions of synthetic customers based on Frank’s actual customer data. Javice then had the fabricated data sent to a third-party vendor that JPMorgan used to verify that Frank’s numbers.

Somehow, the scheme worked. JPMorgan closed the deal, made Javice a managing director and promised her a $20 million retention bonus on top of the roughly $21 million she received from the sale.

Javice and Amar then went shopping to cover their tracks. They bought data on 4.5 million real students for $105,000, and later supplemented the list with still more purchased information.

In the end, JPMorgan paid $175 million for what was essentially a fake email list.

JPMorgan Chastened

What was Javice thinking? A better question may be what was JPMorgan Chase thinking?

JPMorgan claimed it had hundreds of people involved in evaluating the transaction. On the bank’s fourth quarter 2022 conference call, CEO Jamie Dimon said they performed “extensive due diligence.”

Yet it appears that they missed several flashing red warning lights.

JPMorgan’s crack due diligence team thought they were buying relationships with 6,000 schools, but that number doesn’t quite match reality: There are only 5,916 postsecondary institutions where students can use federal financial aid.

They also thought they were buying nearly five million users, yet only two million students a year apply for financial aid. It would have been quite a feat to capture five million students in less than five years.

Did they know that Frank had to settle with the Department of Education in 2018 for violating its registered trademark FAFSA, which stands for Free Application for Federal Student Aid?

Did they contact Frank co-founder Adi Omesy who sued Javice for wage theft in Israel?

Did they notice Javice’s 2017 opinion piece in The New York Times titled, “The 8 Most Confusing Things About FAFSA.” It was so riddled with mistakes that it required an eight-sentence correction.

Did they really think she knew what she was talking about?

This was JPMorgan Chase, a bank with trillions of dollars in assets and armies of investment bankers, lawyers, accountants and due-diligence experts.

U.S. District Judge Alvin Hellerstein called JPMorgan Chase’s due diligence “very poor” at Javice’s sentencing. But he wasn’t buying the argument that the bank’s failures excused her fraud.

“Fraud is fraud whether you outsmart someone who is smart or someone who’s a fool,” he said.

Highly paid Wall Street executives should not be suckers and young entrepreneurs should not be charlatans.

In January 2023, JPMorgan Chase shut down the site.

An expensive education

Javice’s co-defendant Olivier Amar received a slightly lighter sentence of five years and eight months in prison. Unlike Javice, he is currently serving his time. Javice was ordered to forfeit $22.4 million and, jointly with Amar, pay $287.5 million in restitution.

“If it were within my power, I would never make the same mistakes again, not for money, not for recognition, not for anything,” she said at sentencing.

Will JPMorgan, a lumbering, too-big-to-fail behemoth, make the same mistake again? For now, it’s sure getting a lesson.

Imagine getting robbed blind and then suffering a court order to indemnify the perpetrator to the tune of millions.

Javice’s defense hasn’t been cheap. Nineteen lawyers have appeared for her and 16 for Amar. Their bills have included luxury hotels, expensive meals and such curiosities as cellulite butter.

JPMorgan has fought some of those expenses, but a Delaware judge ruled that the bank must keep paying Javice’s legal bills under the agreement it signed when it bought Frank.

The bank wanted relationships with schools.

Instead, it’s getting schooled.

“I like money on the wall.” – Andy Warhol

Miami art dealer Leslie Roberts made millions showing fake Andy Warhols. When it came time for his sentencing Friday, he was a no-show.

Roberts was indicted in April 2025 and later pleaded guilty to conspiracy to commit wire fraud. When he failed to appear for sentencing on Friday, his lawyer told the court he didn’t know where Roberts was, Law360 reports.

The judge rescheduled the hearing for a week later. Roberts could face more than 20 years in prison … if he ever shows.

Pop artist Andy Warhol is perhaps the most diabolically hilarious trend that ever hit the 1%.

He turned soup cans, Coke bottles and Brillo boxes into status objects, often mocking American consumer culture while getting rich collectors to pay enormous sums for images of things everyone else could buy at the grocery store.

Florida real-estate investor Richard Perlman and his family, for instance, spent more than $6.7 million buying more than 200 purported Warhols from Roberts, according to The Wall Street Journal. Perlman settled an earlier lawsuit against Roberts and is now suing a litany of other art-world players he alleges supplied, sold or authenticated bogus works.

It may be difficult to tell a fake Warhol from a real one, considering how the artist mass produced so much of his work in a New York studio he called “The Factory.” But a fake art dealer should be easy to spot.

Vanity Fair laid out Robert’s background last year in a piece headlined: “An Art Fraud Case That Is Bonkers Even by Florida Standards.”

Business Blunders needn’t generate too many pixels to summarize it.

Just two words: Florida Man.

By the time the Perlmans walked into Roberts’ gallery, his provenance was considerably easier to check than the Warhols’ works.

Roberts had received a 15-year federal prison sentence for defrauding his great-uncle in a stock scheme. Artist Romero Britto later won a permanent injunction after Roberts sold counterfeit Brittos. Roberts also served 22 months in federal prison for selling forged Peter Max works — followed by another five months behind bars after violating the terms of his supervised release.

He also claimed to have studied at New York Univeristy and trained at Sotheby’s. He actually attended the University of Miami for just two semesters, and NYU said it had no record of him attending, according to published reports.

Does anybody know about this handy research tool called Google?

Then there was the purported Andy Warhol Foundation representative who reassured Roberts’ customers. His emails came from andywarholfoundation.co. The real Foundation is warholfoundation.org.

This is real-life satire at its finest, opening up a supersized can of dumbass that Warhol might have been proud to paint.

Warhol turned mundane consumer products into masterpieces. Roberts turned Warhol into art.

Today’s post is free. Please share Business Blunders with friends.

Share

It’s the debt, stupid

Washington is borrowing money it can’t stop spending. Silicon Valley is borrowing money for chips it can’t stop replacing.

Fortunately, they both have a plan: borrow more.

This week, the 10-year Treasury yield hit its highest level in 19 years.

Washington has run a deficit of more than $2 trillion already this fiscal year, and it has pushed the national debt past $40 trillion. Servicing this debt is already costing taxpayers more than $1 trillion a year. And that’s more than the government spends on defense.

Then there’s the AI beast Silicon Valley can’t stop feeding, even as it warns that it may kill us all.

Tech companies are spending hundreds of billions on data centers, chips and other infrastructure, increasingly with borrowed money. Goldman Sachs, for one, estimates these hyperscalers could issue $420 billion in bonds next year on top of billions and billions they’ve already borrowed.

The trouble is that today’s state-of-the-art AI chips may become yesterday’s technology long before some of the debts used to buy them come due. Can you say TRS-80?

Then there’s inflation, which isn’t going away, making all that borrowing more expensive.

This predicament was easy for anyone to see coming. Nobody cared.

Read More: Hello? What About The 36 Trillion Tab? (Business Blunders, 2024)

Brace yourselves, folks, not just for increasingly unaffordable mortgages and consumer loans, but for what may be the next big one.

John Roque of 22V Research studied 16 rapid spikes in the 10-year Treasury yield since 1970 and compared them with the financial calamities that followed, CNBC reported on Thursday.

His conclusion: “Something always breaks.”

This week in Ponzis

A Ponzi here, a Ponzi there, a Ponzi almost everywhere.

Regulators had a busy week:

• Foreign exchange: The Commodity Futures Trading Commission accused Cash FX Group of running a $950 million global Ponzi scheme, promising returns of up to 15% a week from expert traders, algorithms and artificial intelligence. The CFTC says it did almost no forex trading, and investors lost at least $406 million. Nothing like losing millions to artificial Artificial Intelligence.

• Trucking: The Securities and Exchange Commission accused Florida trucking entrepreneur Kristopher Lunsford and his companies of raising $127 million by promising investors $1,250 a week per truck. That’s about a 260% annual return. The SEC says $52 million went to earlier investors while Lunsford diverted another $33 million for himself, including millions for travel, bars, nightclubs and casinos. Apparently the money was doing most of the hauling.

• Mobile homes: The SEC also alleged that Michael Ayala’s Wavemark Capital raised $9.6 million to buy mobile homes and promised investors guaranteed annual returns of 12% to 14%. It allegedly bought no mobile homes at all, instead using investor money for Ponzi-like payments and other expenses. The only thing that appeared to be mobile was investors’ money.

No real business plan. No real returns. Real money for the alleged perpetrators. Why does one of the oldest frauds in The White Collar Playbook keep fooling investors? Because they’re not reading Business Blunders. Feel smarter now?

The Feeling isn’t ‘mutual’

Don’t Miss These Blunders

• Florida Man Takes Cops For A Ride It takes a lot of balls to rip off police. Pension administrator employee Michael D. Williams settles civil fraud charges without admitting or denying the allegations.

• Scamway The granddaddy of multilevel marketing gets stuck with a record $225 million settlement as regulators finally crack down on Amway.

• Catch And Release Kevin Kolenda kept getting caught selling bogus prize insurance. He never stopped casting for suckers.

• The Sins Not Even Trump Can Pardon Nikola founder Trevor Milton got a presidential pardon. It won’t erase the financial consequences of his fraud.

• LIV And Let Die LIV Golf can beg for a mulligan in bankruptcy court. But who wants to invest in a losing game?

• Amazon’s Imaginary Friend Jeff Bezos’ e-commerce giant allegedly invented a bidder to drive up prices. Guess who pays.

• Basketball Or Ballmer Ball? The NBA just suspended Steve Ballmer, its richest team owner, for allegedly making up his own rules.

• No One Yelled Fore Good Good Golf is paying steep price after running, ‘the worst ad known to mankind’ and taking Callaway down with it.

• Jes Staley’s Magic Kindom When Wall Street was melting down, this top JPMorgan executive sought a financial wizard. He turned to his pal, Jeffrey Epstein.

• Flip This NBA Team Billionaire Mark Walter is scrambling to raise billions after his insurance companies reported a $20 billion investment blunder. Now he’s flipping the L.A. Lakers.

• Conrad Black – Hollinger International He inherited a fortune and leveraged it into a global newspaper empire. Then he went to prison for stealing from his own company.

• ‘You Better Find Me Incompetent’ Former Abercrombie & Fitch CEO Michael Jeffries finally faces trial for alleged sex trafficking that began nearly 18 years ago

• A Pump And Dump From Prison David Foley hyped penny stocks and bagged millions while serving a federal prison sentence. Now he’s headed back to the office.

• Boiler Room 2026 Cold calls. Sales scripts. Promises of 1,000% returns. The SEC says an old stock-peddling scam found a new generation of victims.

• Michael ‘Mickey’ Monus – Phar-Mor He played doctor with the books. His pharmacy chain kept bleeding.

• Ed Mattar – BestBank Of Boulder He was a lifelong deadbeat. Somehow he got his hands on a state-chartered bank.

• The Luigi Effect Luigi Mangione has changed corporate security. CEOs may never feel safe again.

• NFT Monkey Business Venture capitalists bet millions on a startup promising to build an exchange for cartoon apes. Prosecutors say founder Taj Tarsha blew investor funds on gambling and his DJ career.

• Confessions Of An FBI Crypto Thief Prosecutors say agent Patrick Yaroch raided digital wallets. Then his conscience blew his cover.

• Leaky Pants First came explosive diarrhea. Then came allegations of a $32 million inside job. It’s been one crappy summer for Taylor Farms.

• How To Lose An Internet Fight eBay executives tried to silence a newsletter. It cost them tens of millions of dollars, seven criminal convictions, and one of the worst public-relations disasters in Silicon Valley history.

Imagine working with police officers and firefighters.

They know you. They trust you. Does the thought cross your mind? Maybe I can get their retirement money.

Apparently it does when you are Florida Man.

Michael D. Williams of Port St. Lucie, Fla., worked for a company that administered pension plans for police officers and firefighters.

Unbeknownst to his employer, he set up a money-management side hustle he called Check Mate Investments, according to the Securities and Exchange Commission.

He raised about $860,000 from at least 18 investors. Several were current or retired law-enforcement officers

Turns out, he wasn’t a brilliant investor, just a guy who worked for a pension administrator.

On Wednesday, the SEC charged him with running a fraudulent investment scheme.

“We allege that one of the tactics the defendants used to trick investors was to send them cropped screenshots of graphics that showed exorbitant trading profits,” said Stephanie N. Moot, Director of the SEC’s Miami Regional Office.

In reality, Williams lost hundreds of thousands of dollars trading investor money and diverted nearly half of the $860,000 to personal expenses, including credit-card bills, a sports car and vacations, the SEC alleges.

This is a civil case and Williams and his firm have agreed to a settlement. Remarkably, given what the SEC says he did and to whom he did it to, he has not been charged with a crime.

Business Blunders readers have seen this movie before, and typically on a scale that involves millions or even billions. But on a twisted level, the audacity alleged here is almost admirable.

Don't Miss These Blunders

The SEC’s complaint says Williams told investors his fund was just $40,000 shy of its first $1 million. The message came with an image cribbed from the 2013 film “The Wolf of Wall Street.”

First he allegedly picks cops as his marks. Then he leaves a clue.

Read more

A newspaper colleague approached me in the 1990s, beseeching me to meet about a sure-fire business opportunity.

He wouldn’t tell me what it was.

When we finally met, he spent about 20 minutes telling me how smart, affable and motivated I was. I’d be great at this. I could make a lot of money. I had plenty of connections that could make this happen. I just had to hear him out.

Finally, I beat it out of him.

Amway.

I was the business editor of the Colorado Springs Gazette at the time, and more than a tad insulted. Did he really think I was this stupid? Did I really want a garage full of soap that I couldn’t sell to my friends and family?

People called it Scamway for a reason.

My colleague accused me of being “negative.” To be successful at this, I was going to have to be “positive.” Isn’t that what they always say when you don’t buy the bunk they’re selling?

What I couldn’t understand was why this thing was even legal.

Turns out, Amway had a hall pass. In 1979, the Federal Trade Commission ruled that it wasn’t an illegal pyramid scheme.

The regulator concluded that Amway had rules designed to ensure its distributors actually sold products rather than simply recruiting more distributors to buy the stuff and stack it in their garages.

Nearly half a century later, the FTC is finally taking another look at how that worked out.

And wouldn’t you know it?

The agency now alleges that Amway and two of its biggest recruiting organizations pressured distributors to buy products they didn’t want and couldn’t sell. Worse, they allegedly instructed distributors to report sales that never happened.

Why? According to the government, it helped create the appearance that Amway was about selling products rather than recruiting more people to buy Amway products.

On Thursday, the FTC announced that Amway and the two groups had agreed to pay $225 million to settle the allegations. They dispute the allegations but are paying up just the same.

It is the largest monetary recovery the FTC has ever obtained in a multilevel-marketing case.

And Amway has to pay in cash — not health, beauty, fitness and home-care products that anybody could buy almost anywhere else.

One eyebrow-raising detail from the government’s complaint: Until recently, Amway priced a case of 24 ordinary 16.9-ounce bottles of water at $52. Distributors got a 10% discount.

Try selling that to your clueless cousins.

They’re not that clueless.

(Have you been approached by someone selling Amway? Have you tried to sell Amway? Share your experience with Business Blunders. This story begs for a deeper dive.)

Leave a comment

Weapons of mass hallucination

The bad decision-making at the Department of War got a boost from an AI chatbot that almost started a war with China, according to an exclusive report from CNN this week.

During our seemingly misguided war with Iran this spring, a U.S. special-operations analyst asked an AI chatbot to analyze intelligence about the cargo on a Chinese ship traveling through the Middle East.

The chatbot concluded that the ship was carrying components for nuclear weapons. The analyst then used AI again to turn the findings into a standard intelligence report, which was circulated through the military.

Call it chatbot diplomacy: Armed U.S. personnel prepared to board the Chinese vessel. Military aircraft were already in the air.

There should have been a qualifier: “This War May Contain Inaccurate Information.”

I use AI to generate Business Blunders cartoons and for help with research. By my rough reckoning, it’s about 80% accurate. And when it’s wrong, it can be way, way wrong. You have to check everything. And if you’re sending armed troops after a Chinese ship, maybe you should check twice.

Fortunately, somebody did before someone started World-War-III-GPT.

CNN quoted one source called the report “entirely false.” Another said it “almost started a war.”

Add this episode to the past couple weeks of extraordinary AI panic.

Anthropic CEO Dario Amodei warned last weekend that the industry needs to slow down, saying increasingly autonomous AI agents could pose catastrophic risks.

Ya think?

OpenAI CEO Sam Altman also called for slower pacing and greater coordination on safety. As have other AI luminaries.

President Donald Trump dismissed such warnings as a “HOAX.” And Congressional Republicans haven’t allowed Democrats to do anything about a rogue president, so why would they let them mess with a rogue AI?

California Gov. Gavin Newsom signed an executive order on Friday to step up AI safeguards, including independent oversight and AI “kill switches.”

“The federal government’s abject failure to create any form of meaningful AI oversight or accountability should alarm every American, especially when AI CEOs themselves are begging for regulation.” – Gov. Gavin Newsom

We’ve already seen several incidents in which AI models escaped from isolated testing environments and gained unauthorized access to real computer systems. We’ve seen them lie, cheat and steal – just like some top corporate executives – to accomplish nefarious goals.

Read More: AI Gets A Performance Review (Business Blunders)

The latest AI misadventure came to light on Friday when The Wall Street Journal reported that Gemini broke out of a cybersecurity test in May and hacked into three companies.

In one case, Gemini repeatedly guessed the passwords until it got in. Think your bank accounts are safe? Think your crypto will never be hacked? AI is still in its infancy and the baby is already a prodigy.

This is no longer an apocalyptic sci-fi movie. This could be humanity’s final blunder.

Anthropic reported earlier this month that malicious actors have already used Claude in cyberattacks, surveillance and conventional-weapons development. Researchers found cases involving guided rockets, drone swarms and targeting software.

Dr. Strangelove never had it so easy.

The chatbot didn’t need self-awareness to misidentify a nuclear cargo. It didn’t need to formulate a plan to Ctrl-Alt-Delete humanity.

One source CNN quoted framed what could be the end in brilliantly simple terms: “AI allows you to get to a bad idea faster.”

This week’s Ponzi

Kansas City Chiefs star Travis Kelce knows how to spot a hole in a football play. Just not in an investment opportunity.

Kelce was among 64 victims of a Ponzi scheme run by Siddharth Jawahar, 38, founder of Texas-based Swiftarc Capital. Having married pop star Taylor Swift, was it the coincidental name of the firm that threw him off his game?

Prosecutors say Jawahar, who was in the U.S. illegally, took in more than $35 million from investors between 2016 and 2023 but invested only about $10 million. The rest went toward paying earlier investors and financing luxury apartments, private jets and expensive outings.

A Ponzi scheme is one of the oldest cons in The White Collar Playbook, and yet slickster salesmen keep finding victims.

On Tuesday, a federal judge sentenced Jawahar Tuesday to 11 years in prison and ordered him to pay $31.35 million in restitution.

Kelce’s losses have not been disclosed.

It was truly 100% organic. Give or take 100%.

Tour The Business Blunders Hall Of Shame

Don’t Miss These Blunders

• Catch And Release Kevin Kolenda kept getting caught selling bogus prize insurance. He never stopped casting for suckers.

• The Sins Not Even Trump Can Pardon Nikola founder Trevor Milton got a presidential pardon. It won’t erase the financial consequences of his fraud.

• LIV And Let Die LIV Golf can beg for a mulligan in bankruptcy court. But who wants to invest in a losing game?

• Amazon’s Imaginary Friend Jeff Bezos’ e-commerce giant allegedly invented a bidder to drive up prices. Guess who pays.

• Basketball Or Ballmer Ball? The NBA just suspended Steve Ballmer, its richest team owner, for allegedly making up his own rules.

• No One Yelled Fore Good Good Golf is paying steep price after running, ‘the worst ad known to mankind’ and taking Callaway down with it.

• Jes Staley’s Magic Kindom When Wall Street was melting down, this top JPMorgan executive sought a financial wizard. He turned to his pal, Jeffrey Epstein.

• Flip This NBA Team Billionaire Mark Walter is scrambling to raise billions after his insurance companies reported a $20 billion investment blunder. Now he’s flipping the L.A. Lakers.

• Conrad Black – Hollinger International He inherited a fortune and leveraged it into a global newspaper empire. Then he went to prison for stealing from his own company.

• ‘You Better Find Me Incompetent’ Former Abercrombie & Fitch CEO Michael Jeffries finally faces trial for alleged sex trafficking that began nearly 18 years ago

• A Pump And Dump From Prison David Foley hyped penny stocks and bagged millions while serving a federal prison sentence. Now he’s headed back to the office.

• Boiler Room 2026 Cold calls. Sales scripts. Promises of 1,000% returns. The SEC says an old stock-peddling scam found a new generation of victims.

• Michael ‘Mickey’ Monus – Phar-Mor He played doctor with the books. His pharmacy chain kept bleeding.

• Ed Mattar – BestBank Of Boulder He was a lifelong deadbeat. Somehow he got his hands on a state-chartered bank.

• The Luigi Effect Luigi Mangione has changed corporate security. CEOs may never feel safe again.

• NFT Monkey Business Venture capitalists bet millions on a startup promising to build an exchange for cartoon apes. Prosecutors say founder Taj Tarsha blew investor funds on gambling and his DJ career.

• Confessions Of An FBI Crypto Thief Prosecutors say agent Patrick Yaroch raided digital wallets. Then his conscience blew his cover.

• Leaky Pants First came explosive diarrhea. Then came allegations of a $32 million inside job. It’s been one crappy summer for Taylor Farms.

• How To Lose An Internet Fight eBay executives tried to silence a newsletter. It cost them tens of millions of dollars, seven criminal convictions, and one of the worst public-relations disasters in Silicon Valley history.

• Another Billion-Dollar Bedtime Story Silicon Valley bet big on yet another young prodigy. Now they’re waking up to reality ... again.

Rocky Jones hooked a trophy trout in the 35th annual Saratoga Ice Fishing Derby in January 2018,

The fish was tagged. He could not detect the color, because he’s color blind, but a friend told him it was purple.

Jones is a veteran ice fisherman, but what were the odds of reeling in a purple tag?

Saratoga Lake is a 300-acre reservoir, roughly 80 miles west of Laramie, Wyo. It is stocked with 10,000 to 15,000 trout each year. And Jones, of Arvada, Colo., caught one of only three with a purple tag.

This made him the improbable winner of a sizable cash prize.

More improbable was the expectation that the company that insured this prize would actally pay.

It was a dubious outfit called “Hole-in-Won,” owned and operated by Kevin Kolenda, 69, of Norwalk, Conn.

Kolenda has spent more than a decade pretending to insure contests for organizations like the Saratoga/Platte Valley Chamber of Commerce through his Hole-in-Won companies.

His promotional collateral touted “the most successful prize insurance company in the world.” He claimed to have paid out thousands of awards to winners around the world.

Yet whenever his customers tried to collect, he referred them to his “claims department” in Washington D.C., which did not exist. Or he deployed any number of other annoying stall tactics.

There was always another sucker to take his bait – hook, line an sinker.

Over the years, Kolenda and his businesses were hit with cease-and-desist orders, civil judgments and other legal actions in Connecticut, Iowa, North Carolina, Washington, Massachusetts, Oregon, Nevada, Virginia, Minnesota, Pennsylvania, California, and Arkansas. He often dodged those claims as well.

Don't Miss These Blunders

Here’s a peek at his rap sheet:

• In 2011, Connecticut Superior Court convicted Kolenda of larceny and ordered to pay restitution and serve three-years of probation.

• In 2013, a Missoula County Justice Court in Montana convicted him of acting as an insurance producer without a license and fined him $10,000.

• In 2014, a King County Superior Court in Washington convicted him of engaging in an unauthorized insurance transaction and one count of theft and sentenced him to 90 days in prison.

• In 2016, the King County Superior Court convicted him again. This time for attempted theft and attempting to engage in an unauthorized insurance transaction. This time he was sentenced to 15 months in prison.

• In 2024, he was arrested again. While out on bond pending trial, he continued to sell prize insurance without a license. His bond was revoked. And he has been detained since March 6.

On Tuesday, Kolenda pleaded guilty to fraud, after prosecutors alleged he defrauded dozens of organizations and individuals out of hundreds of thousands of dollars. He now faces up to 20 years in prison when he is scheduled for sentencing on Dec. 15.

He’s like a dumb-ass fish that keeps getting caught and released. Didn’t anyone notice his tags?

Read more

“Is there no place left for repentance, none for pardon left?” – John Milton, “Paradise Lost.”

Investors lost millions buying stock of electric-truck startup Nikola. Founder Trevor Milton was sentenced to four years in prison for defrauding them. But President Donald Trump granted his freedom with a full pardon in March 2025.

Milton thinks it’s a free pass to stiff his investors.

On Wednesday, a judge ruled otherwise.

Now Milton will have to face a potentially costly investor lawsuit.

He’s failed to overturn a $167.7 million arbitration award that Nikola won against him, much of it stemming from the company’s 2021 settlement with the Securities and Exchange Commission. And on Thursday, another judge rejected his attempt to use the pardon to salvage the nearly $70 million claim he filed against Nikola in bankruptcy court.

Contrary to some viral claims online, Trump is not Jesus. And not even Jesus’ forgiveness suspends the earthly consequences of one’s actions. Did this fraudster actually think he was going to Trump heaven?

Read more

The most obnoxious thing that ever happened to the game of golf filed bankruptcy on Tuesday.

What a whiff.

LIV Golf was essentially a hostile takeover attempt of professional golf.

Saudi Arabia’s sovereign wealth fund dumped more than $5 billion into the startup league, showering the world’s top golfers with enormous contracts and fabulous prizes to lure them away from the PGA Tour.

Three-time masters winner Phil Mickelson reportedly got a $200 million deal. Jon Rahm bagged a reported $300 million deal.

The money was breathtaking. So was the arrogance behind it.

Four years later, LIV landed in bankruptcy court with just $100 million to $500 million in assets and $500 million to $1 billion in liabilities.

And now some of the world’s top golfers can call themselves LIV’s top creditors.

Golfers account for the seven largest unsecured claims, with 14 players among LIV’s 30 biggest unsecured creditors.

Rahm leads the pack at about $7.5 million, followed by Bryson DeChambeau at $5.8 million and Dustin Johnson at $5.5 million. Cameron Smith, Tyrrell Hatton and others are also waiting to get paid.

And that hardly tallies everything LIV might owe under the players’ long-term contracts. The bankruptcy filing reflects amounts already owed or accrued.

Welcome to the bankruptcy game, gentlemen. Take a number. (Here’s a link to the filings you’ll be reading.)

It’s a fitting turnabout for a league that blew up the golf world when it launched in 2022.

LIV split players into warring camps, triggered lawsuits and turned a polite sport into a four-year grudge match.

And all of this rancor was bankrolled by a regime accused of using sports to burnish its reputation despite its atrocious human-rights record and the murder of journalist Jamal Khashoggi.

“We know they killed Khashoggi and have a horrible record on human rights. “They execute people over there for being gay. Knowing all of this, why would I even consider it? Because this is a once-in-a-lifetime opportunity to reshape how the PGA Tour operates.” ” – Phil Mickelson in 2022.

Read More: Sand Trap (Business Blunders)

Now the disruptors have disrupted themselves.

And LIV’s biggest unsecured creditors, the money-chasing pros it paid fortunes to pry away from the PGA Tour, could wind up owning most of the reorganized league.

Or does the PGA want them back? Some fans sure don’t. “They left for the money, don’t let ‘em back,” one fan told Golf Digest in a 2024 report.

So maybe they can go play with themselves.

LIV’s proposed resurrection would turn the players into majority owners of a slimmed-down LIV Golf 2.0, with private-equity firm BC Partners and other investors expected to provide fresh capital.

Don't Miss These Blunders

And Here’s Another Golf Blunder: No One Yelled Fore (Business Blunders)

But seriously, sports fans? Who wants to pour more money into a golf league that has already burned through more than $5 billion without building much of a business?

“I don’t think there’s anything to restructure here,” said J. Scott Victor, a managing director at SSG Capital Advisors, told Golf Digest in June. “This is an investment that’s not panned out.”

Read more