“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?

Milton had some well-connected help. His trial lawyer was Brad Bondi, brother of ousted Attorney General Pam Bondi. Milton and his wife also contributed more than $1.8 million toward Trump’s 2024 reelection effort before the pardon.

You know what the preachers say: Give and you shall receive. Trump’s pardon wiped away any criminal restitution he might have been ordered to pay his investors. Prosecutors had sought more than $660 million. The only prayer investors have left for recovery is to sue.

For all the courtroom wrangling, the argument that a pardon cancels all civil liabilities requires some magical thinking. Can Jan. 6 rioters call Visa and argue they don’t have to pay the credit card tabs they ran up traveling to Washington that fateful week because they got a pardon? Should Paul Manafort, Steve Bannon and Roger Stone stop paying their mortgages or their tabs at Mar-a-Lago? Maybe a Trump pardon is also good for parking tickets, alimony and overdue library books.

Here’s what Trump had to say about Milton:

“They say the thing that he did wrong was, he was one of the first people that supported a gentleman named Donald Trump for president. He supported Trump. He liked Trump. I didn’t know him, but he liked him.

“They persecuted, they destroyed five years of his life. He ... fought for five years of his life, and he did nothing wrong.

“And he’s a good person.”

Milton built Nikola into one of the hottest stocks of the electric-vehicle boom with grand claims about its technology and trucks. In one infamous promotional video, a Nikola One semi appeared to be cruising down a highway under its own power. It was towed to the top of a hill and sent rolling down a stretch that looked flat from the camera angles.

Nikola filed bankruptcy in February 2025 and liquidated substantially all its assets. For a zero-emission company, Nikola left one hell of a stain.

Milton has tried to use his pardon as an industrial-strength stain remover. He even put out a press release to wrap himself in everyman patriotism and attack the justice system:

“This pardon is not just about me – it’s about every American who has been railroaded by the government, and unfortunately, that’s a lot of people.

“It is no wonder why trust and confidence in the Justice Department has eroded to nothing. I wish judges would stop believing whatever the prosecutors feed them so Americans could trust the justice system again. Until that happens, our justice system will continue to erode until there is nothing left.”

Blaming the world for your own downfall is an old story.

Another Milton wrote it nearly 360 years ago.

He called it “Paradise Lost.”

Not so Luckey

Shiloh Luckey bought herself a house in Inglewood, California.

She bought a Tesla.

She had a wedding on the Caribbean island of Anguilla.

Not a bad lifestyle for the founder of a tax-compliance startup.

There was just one problem: Luckey was allegedly paying for it with money she took from her investors, according to prosecutors.

Luckey, 42, raised at least $13.3 million for ComplYant, a startup she founded to help small businesses navigate tax regulations. Prosecutors say she lured investors with inflated claims about the company’s revenue, customers, subscriptions and cash reserves.

She also allegedly claimed she was a licensed CPA with deep experience in tax management and accounting. She wasn’t.

The company ran into financial trouble and shut down in 2023. Investors lost their entire investments. But don’t cry for the investors. This was the smart money being really dumb.

ComplYant’s investors included prominent venture firms Craft Ventures, Mucker Capital, Slauson & Co. and Techstars.

Craft, co-founded by investor and Trump adviser David Sacks, led a $5.5 million funding round in 2022.

Said Michael Tam, partner at Craft Ventures:

“Shiloh is a domain expert with a keen product sense on a mission to empower all types of business owners with fiscal guidance. This is the strong combination we look for as investors and we found it in spades with ComplYant.”

Found what in spades? Her CPA credentials? Seems like something a crack VC due diligence team could have checked before handing over millions.

A federal grand jury charged Luckey with nine counts of securities fraud, three counts of wire fraud, bank fraud and two counts of money laundering, prosecutors announced on Wednesday.

She was arrested Sunday in Fort Lauderdale, Fla., where she was trying to board a cruise ship.

An un-Luckey break. Just when her ship had come in.

The 34-cent bankruptcy

A Chantilly, Va., man filed for bankruptcy claiming he had just 34 cents in financial assets.

Thirty-four cents.

Was that before or after he hired a bankruptcy lawyer? And geez, did he save anything for the parking meter outside the courthouse?

Federal prosecutors say Jihoon Park, 52, persuaded people to entrust him with their savings and retirement money, promising safe investments and high returns. Then he transferred more than $2.5 million of their money to himself, using some of it to buy a house and cryptocurrency.

Then poof. He was down to his last 34 cents. You can’t sue me.

A federal jury in Alexandria didn’t buy it.

On Tuesday, the panel convicted Park of three counts of wire fraud and two counts of bankruptcy fraud. He faces as much as 20 years in prison on each wire-fraud count and five years on each bankruptcy-fraud count when he is scheduled for sentencing on Dec. 10.

The good news? If Park gets a solid prison job, he could double his life savings in about three hours.

It’s not really lonely at the top

Read More: Lost In Love (Business Blunders)

Don’t Miss These Blunders

• 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

• AI Eats IBM The computing giant spent three years serving investors an artificial intelligence feast. This week, it found itself on the menu.

• How To Read Epstein Files Goldman Sachs’ former general counsel Kathryn Ruemmler can’t lawyer her way out of her emails

• The Wells Fargo Fraud Wagon From fake accounts to mortgage abuses, this bank keeps rolling through scandals. Its latest delivery: $50 million settlement over claims it enabled a Ponzi scheme.

• Disposable Income A Memphis gynecologist billed $41 million while reusing “dirty” medical devices on thousands of women

• Chartered Financial Asshats An embarrassing embezzlement case defied ethics, professionalism and even financial controls at the CFA Institute

• The Great Gatsby Of Crypto Christopher Delgado went from In-N-Out Burger to the Fontainebleau, buying credibility from politicians, celebrities and charities before his $400 million Ponzi scheme collapsed

• The Baloney Incident How JPMorgan Chase turned a deli tray into a multimillion-dollar battle and another reputational pickle

• Fuel For Fools Volkswagen can’t recover from ‘Dieselgate.’ FirstBank of Puerto Rico accused of banking Epstein’s sex trafficking operation. An embezzling healthcare CEO bets his clinic.

• Billion-Dollar Band-Aids The latest government crackdown on medical billing fraud showcases Ferraris, diamonds, luxury resorts and a yacht named ‘Butt Nekkid.’ But the real question is, how does this folly keep happening?

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

“The table is tilted, folks. The game is rigged and nobody seems to notice.” – George Carlin

Amazon owns the store. It controls the shelves. It decides which products you see first. And it sells some of the best spots on those shelves to the highest bidder.

Now the government says Amazon was secretly bidding against its own advertisers.

The Federal Trade Commission and 22 states sued Amazon this week, alleging the e-commerce giant rigged its advertising auctions to squeeze tens of billions of additional dollars from businesses selling products on its site.

“When one of the world’s largest online retailers engages in unfair and deceptive conduct, the impact can be staggering,” said FTC Chairman Andrew Ferguson. “Amazon has millions of advertising customers who were misled into paying significantly higher prices. These higher costs were largely passed on to American consumers.”

Amazon denies the allegations, calling the case “misguided” and “patently false.” Now the courts will sort it out.

The complaint lays out how the alleged racket worked. Search Amazon for anything you want and many of the first products you see are “sponsored.”

Sellers bid for those spots in auctions that Amazon said were competitive. Amazon promised the winner would pay just a penny more than the next-highest bidder. But sometimes there was no next-highest bidder.

One Amazon executive acknowledged internally that the price sometimes “isn’t set by an actual bidder.” Another internal document called it an “invented auction participant.”

It’s like the auctioneer pointing to an empty chair and announcing, “I hear $500 from the gentleman in the back. Can I hear $500.01? Anybody?”

It sounds like Amazon’s imaginary friend was one of its best customers.

The FTC says that Amazon extracted tens of billions of dollars this way over seven years, beginning in 2019, cranking up the hidden surcharge even more on Prime Day and Black Friday. Internal documents warned that revealing how the auctions really worked could cause “irrevocable damage to advertiser trust.”

Call it a modern example of Adam Smith’s “invisible hand” of the economy. Only now it’s waving a paddle.

If he were alive today, he’d probably cancel his Prime membership.

How do you solve a problem like Maria?

Fox News says it has parted ways with Maria Bartiromo. Maria Bartiromo’s lawyer says reports that she was fired or no longer works for Fox are “absolutely and unequivocally false.”

Who to believe? The network that paid $787.5 million to settle Dominion Voting Systems’ lawsuit over election lies? Or the anchor who spent years lavishing praise on President Donald Trump while giving his election claims a remarkably friendly hearing?

Fox, obviously, has scrubbed Bartiromo from its shows.

Bartiromo was front and center in Fox’s disastrous embrace of Trump’s false claims that the 2020 election was stolen.

Her broadcasts figured prominently in the Dominion Voting Systems case, and she remains a defendant in Smartmatic’s $2.7 billion defamation suit over bogus election claims.

After paying dearly for its blunders, Fox may be signaling the White House that it is done spreading false election claims – and with the White House meddling in its editorial decisions.

Media reports say the network instructed its people not to amplify Trump's latest unsupported claims about the 2020 election. Bartiromo allegedly responded by sharing the internal directive with White House officials.

Sharing confidential editorial directives with a source would be a firing offense at many news organizations. If she wasn’t fired, she should have been … a long time ago.

How do you solve a problem like Maria? You change the locks. Or like in “The Sound of Music,” you make her go work for the von Trapp family.

The AG called ABC Plumbing. So it’s done?

“I called ABC. … So it’s done.”

Chicago-area homeowners have heard that reassuring pitch for years from ABC Plumbing, Heating, Cooling & Electric.

Now Illinois Attorney General Kwame Raoul has called ABC, suing the Arlington Heights, Ill.-based home-repair company for allegedly turning homeowner fears of broken furnaces, clogged pipes and electrical problems into a high-pressure sales strategy.

The state says ABC technicians sometimes showed up to fix one problem, wandered into other parts of customers’ homes and discovered additional “emergencies” or even “life-threatening hazards.”

Customers, often seniors, were allegedly pressured into authorizing expensive repairs, sometimes by signing tablets without a meaningful chance to read what they were signing.

Then there was the work. The lawsuit alleges some repairs were unnecessary, incomplete, shoddy or performed by unlicensed technicians.

One woman cited in the complaint was allegedly charged nearly $50,000 for sewer work that dragged on for months and involved tearing out parts of her basement wall. Her basement kept flooding. She finally called another company, which fixed the problem for $1,500.

ABC says it has served Chicago-area homeowners for more than 70 years and “earned their trust by operating with integrity.” The company has said it would respond after reviewing the complaint.

The attorney general called ABC. We’ll see what’s done.

This week’s Ponzi

Diamonds are forever. And so are Ponzi schemes.

This week, the Securities and Exchange Commission sued Mordechai Ferder, accusing the former CEO of luxury jeweler Lugano Diamonds of persuading wealthy investors to pour hundreds of millions of dollars into diamonds that Lugano allegedly didn’t own.

Instead of buying the diamonds, the SEC says Lugano made what it explicitly calls “Ponzi-like payments” back to investors, disguising them on its books as vendor purchases or deposits for future inventory.

The SEC says Lugano improperly booked investor money as sales, helping the jeweler and its publicly traded parent, Compass Diversified, report more than $1 billion in fictitious revenue.

Ferder’s lawyer has denied wrongdoing and says Compass knew about the financing arrangements.

After the alleged fraud unraveled, Compass, which trades on the New York Stock Exchange, had to restate three years of financial results. For 2024, Compass originally reported $230 million in operating income. After unraveling the Lugano accounting, it restated that figure to a $15 million operating loss.

Diamonds are forever. Imaginary revenue has a shorter shelf life.

This post is free. Please share it with a friend.

Share

Some unicorns go to the glue factory

Unicorns, those rare billion-dollar startups that promise to disrupt the working world, are not always what they seem.

Elizabeth Holmes fooled high-profile investors like Rupert Murdoch and a wide swath of Silicon Valley.

Read more about her in the Business Blunders Hall of Shame.

Tour The Business Blunders Hall Of Shame

Don’t miss these Blunders

• 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

• AI Eats IBM The computing giant spent three years serving investors an artificial intelligence feast. This week, it found itself on the menu.

• How To Read Epstein Files Goldman Sachs’ former general counsel Kathryn Ruemmler can’t lawyer her way out of her emails

• The Wells Fargo Fraud Wagon From fake accounts to mortgage abuses, this bank keeps rolling through scandals. Its latest delivery: $50 million settlement over claims it enabled a Ponzi scheme.

• Disposable Income A Memphis gynecologist billed $41 million while reusing “dirty” medical devices on thousands of women

• Chartered Financial Asshats An embarrassing embezzlement case defied ethics, professionalism and even financial controls at the CFA Institute

• The Great Gatsby Of Crypto Christopher Delgado went from In-N-Out Burger to the Fontainebleau, buying credibility from politicians, celebrities and charities before his $400 million Ponzi scheme collapsed

• The Baloney Incident How JPMorgan Chase turned a deli tray into a multimillion-dollar battle and another reputational pickle

• Fuel For Fools Volkswagen can’t recover from ‘Dieselgate.’ FirstBank of Puerto Rico accused of banking Epstein’s sex trafficking operation. An embezzling healthcare CEO bets his clinic.

• Billion-Dollar Band-Aids The latest government crackdown on medical billing fraud showcases Ferraris, diamonds, luxury resorts and a yacht named ‘Butt Nekkid.’ But the real question is, how does this folly keep happening?

• Pre-Pardon Panic U.S. Senators introduce a resolution to discourage Trump from freeing FTX founder Sam Bankman-Fried

• A Trickle And A Trillion Microfinance promised to alleviate global poverty. Megafinance created a trillionaire.

Capitalism, like basketball, only works if the richest guy in the arena can’t make up his own rules.

Los Angeles Clippers owner Steve Ballmer should understand this better than most. He spent 34 years at Microsoft, including 14 as CEO. He spent much of his early tenure dealing with the aftermath of one of the most consequential antitrust cases in American history.

On Wednesday, the NBA suspended him for a year, fined his team $30 million and confiscated five first-round draft picks. The league concluded that Ballmer violated salary cap rules in arranging millions of dollars in outside compensation for superstar Kawhi Leonard.

Ballmer and the Clippers deny wrongdoing. “We vehemently reject the NBA’s findings, which are the result of a heavily biased investigation seeking to justify a predetermined narrative rather than facts and evidence,” the team said in a statement.

But NBA Commissioner Adam Silver called the violations flagrant and said the punishment reflected their seriousness.

Ballmer is the 9th-richest person on Earth, with more than $156 billion, according to Forbes, as of this writing. If there were no rules about salary caps, he could recruit the top players in the world and pay them ANYTHING.

Why not just let the Clippers carry the ball, tackle point guards, move the three-point line, and award extra points while we’re at it? The answer is simple: Nobody loves a rigged game.

And this is why some people on the left are turning against capitalism. They increasingly see a game rigged for people with enough money and power to make their own rules.

You want to support free markets? Demand the rule of law. You want to support your favorite NBA team? Call all the fouls. Even when the guy committing them is worth $152 billion.

Don't Miss These Blunders

An aspiring fraud

Business Blunders readers may remember Aspiration. Ballmer personally invested millions in this supposedly green fintech startup and struck a $300 million sponsorship deal between Aspiration and the Clippers.

Then Aspiration gave Leonard a marketing deal worth up to $28 million in cash and $20 million in stock that reportedly required little or no promotional work.

In October, Business Blunders suggested “Aspiration may have been the Clippers’ most creative payroll department.”

Read More: There’s No Such Thing As A Green Bank Or A Fair Game (Business Blunders)

At the time, its founder Joseph Sanberg had pleaded guilty to fraud charges after admitting to faking bank statements, inventing phantom revenue, and inflating cash balances while preaching the gospel of sustainability. And when the green in his green fintech startup finally ran out, it filed bankruptcy in March 2025 leaving investors in the dirt.

Sandberg is now serving a 14-year prison sentence.

Who knew basketball had a penalty box?

Now Ballmer can spend the next year watching the games on a big screen TV from home like the little people who can’t afford a Clippers ticket. Fortunately, he’s rich enough to afford premium League Pass.

This is the guy who made his fortune helping Microsoft jam Windows into practically every computer in the world. Then he became CEO and spent so much time defending this operating system franchise that he missed much of what came next.

Microsoft gave us Zune. Remember Zune? Me neither.

Meanwhile, Google took search. Facebook took social media. And Apple reinvented the smart phone.

“There's no chance that the iPhone is going to get any significant market share. No chance,” Ballmer declared in 2007.

He figured Apple might capture 2% or 3% of the market while Microsoft’s software would run 60% or 70% or 80% of the world's phones.

He’s a salesman. Not a visionary. And now it looks like he cheats at basketball, too.

Read more

Golf is not a contact sport. Slamming a woman to the ground is not the way a real man prepares to tee off. But how are a bunch of YouTubing golf bros supposed to know that?

The golf world is inflamed this week over an advertisement for a co-branded driver by Callaway, the world’s largest golf-club manufacturer, and Good Good Golf, a YouTube-born golf entertainment and merchandise company.

In the 56-second spot, Good Good co-founder Garrett Clark goes completely psycho when golf pro Alexis Miestowski reaches for Clark’s new club. He charges at her, shoulder checks her onto the turf, looms over her flattened body and scolds, “Do not touch my new driver.”

It was supposed to be a parody of the horror movie “Obsession.” It came off as unadulterated misogyny.

Internet culture is awash in such horrors, whether it’s the bigoted “manosphere,” the creepy Tate brothers awaiting trial for alleged sex crimes, Donald Trump’s shameless boast about where he likes to grab women, the endless revelations from the Epstein files or increasingly abusive online porn.

Perhaps this is why the idiots at Good Good and Callaway didn’t wince – at least not hard enough – before approving the release of what Clark now calls, “the worst ad known to mankind.”

They are wincing harder now.

Callaway has dumped Good Good as a business partner. Dick’s Sporting Goods and Golf Galaxy have pulled its merchandise from their shelves. The Golf Channel shelved the premiere of a Good Good reality show. And Good Good has surrendered its title sponsorship of a PGA Tour event scheduled for November.

Ads are supposed to attract customers, not drive them away. Now even a city golf course in Salt Lake City has announced it is removing Callaway merchandise from its shelves.

Kendrick, Clark and a gaggle of young golf creators started Good Good in Texas in 2020 when they filmed themselves goofing around on the course.

The videos caught on, and the YouTube channel grew into a sprawling golf business with millions of subscribers, apparel and equipment sold nationwide, television events and major corporate sponsors.

Last year, investors including Peyton Manning’s Omaha Productions poured $45 million into the company, and Good Good reportedly generated more than $40 million in revenue. Now, instead of going viral, they’ve gone radioactive.

Good Good apologized and quickly deleted the ad, though the spot will have a long afterlife on the internet, including links in this feature from Sports Illustrated (if you care to watch this train wreck).

Callaway acknowledged that it had approved the spot and said that it “should never have happened.” In addition to dumping Good Good as a partner, it tightened its internal review process and pledged $1 million to organizations combating violence against women.

Today, nearly one-third of golfers are female and they make up the biggest growth area for the sport, according to the National Golf Foundation. And Good Good’s message to them was, “Do not touch my new driver?”

You can’t just take a Mulligan for something this stupid, but the apology tour was going about as well as an apology tour could go with both companies accepting accountability.

And then Good Good’s CEO just had to slice another ball into the rough.

At 3:38 a.m. Friday, Good Good CEO Matt Kendrick took to X to accuse Callaway of approving the ad, making Good Good “take the fall,” and then dumping the company in a “coordinated media blitz.”

He even said he was not opposed to suing his former business partner. Kendrick later deleted the posts – apparently discovering, for the second time in a week, that one’s darkest musings are best left in the clubhouse locker room.

Big Tech’s Big Tobacco moment

Big Tobacco got kids hooked on cigarettes. Meta allegedly figured out how to get them addicted to screens.

Now it could cost the Facebook parent as much as $17.1 billion.

Meta reached a landmark settlement Wednesday with 47 states, the District of Columbia and several U.S. territories over allegations that it deliberately designed Facebook and Instagram to keep children hooked. And that it mislead the public about the risks. Meta did not admit wrongdoing.

This is just a start, says District of Columbia Attorney General Brian Schwalb:

“Meta intentionally exploited kids for profit and then lied about it, claiming its products were safe when its own internal research confirmed the platforms were addictive and harmful. … It will not be the last.”

The settlement comes with some parental controls Meta apparently didn’t think of itself: a default two-hour daily limit for minors, restrictions on late-night use and notifications during school hours, stronger age verification and limits on addictive features.

Just a cost of doing business for a tech giant accused of melting kids’ brains. Even $17.1 billion amounts to a fraction of Meta’s $201 billion in 2025 revenue. And Wall Street loved the deal. Meta shares jumped as much as 4% on the news.

Keep scrolling, kids.

KKR caught cheating

Private-equity giant KKR is paying $250 million for allegedly cheating its money-grubbing ass off on government paperwork.

When investment giants like KKR buy companies, federal law requires them to tell regulators what they’re doing and turn over documents that regulators use to look for antitrust problems.

KKR repeatedly failed to file, withheld required documents and even altered documents before handing them over, the Justice Department said Wednesday in announcing the penalty.

KKR manages nearly $800 billion and has made more than 100 of these filings since 2021. Prosecutors say the violations involved at least 16 transactions.

You’d think for $250 million, KKR could have hired an intern or two to fill out the forms.

Instead, it copped to a record-breaking sanction, more than 20 times the previous record penalty under the law.

The end of the road for First Brands

It looks like Ohio-based auto parts conglomerate First Brands Group will be sold for scrap.

A federal bankruptcy judge on Monday rejected the company’s plan to reorganize in Chapter 11 and ordered it into Chapter 7 liquidation.

First Brands stands as one of the biggest private-credit industry blunders that we know about so far. (You just wait.)

Its founder Patrick James has pleaded not guilty to federal fraud charges, after allegedly duping some pretty big names in the financial world, including UBS, Blackstone, Jeffries Financial Group, Santander and factoring giant Raistone Capital.

Read More:

• Idiot Lights (Business Blunders)

• Parts Is Parts (Business Blunders)

Wall Street financed the whole car. Now it gets to fight over the hubcaps.

Sometimes death isn’t a sure bet

This week’s Ponzi

Artificial intelligence. Cryptocurrency. A supercomputer. Guaranteed returns. Brent Kovar spun just about every magic money-making phrase he could find.

Kovar told investors his Las Vegas company, Profit Connect, used AI software and a supercomputer to mine cryptocurrency and verify crypto transactions. He promised annual returns of up to 30% with a 100% money-back guarantee.

He also claimed Profit Connect was backed by hundreds of millions of dollars in crypto reserves.

Prosecutors said the profits didn’t connect. The company had no reserves and couldn’t generate the promised returns. Instead, Kovar used investor money to buy a house, shower employees with gifts and pay earlier investors with money from newer ones. He ultimately took $24 million from at least 400 investors.

A federal jury on Monday convicted Kovar of wire fraud, mail fraud and money laundering. He is scheduled to be sentenced Nov. 30 and faces a maximum 280-year prison sentence, if only he could live so long.

Yes, it just goes to show, Business Blunders can find yet another Ponzi to write about every week. This is one of the oldest investment scams in the White Collar Playbook. What’s wrong with people?

Don’t Miss These Blunders

• 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

• AI Eats IBM The computing giant spent three years serving investors an artificial intelligence feast. This week, it found itself on the menu.

• How To Read Epstein Files Goldman Sachs’ former general counsel Kathryn Ruemmler can’t lawyer her way out of her emails

• The Wells Fargo Fraud Wagon From fake accounts to mortgage abuses, this bank keeps rolling through scandals. Its latest delivery: $50 million settlement over claims it enabled a Ponzi scheme.

• Disposable Income A Memphis gynecologist billed $41 million while reusing “dirty” medical devices on thousands of women

• Chartered Financial Asshats An embarrassing embezzlement case defied ethics, professionalism and even financial controls at the CFA Institute

• The Great Gatsby Of Crypto Christopher Delgado went from In-N-Out Burger to the Fontainebleau, buying credibility from politicians, celebrities and charities before his $400 million Ponzi scheme collapsed

• The Baloney Incident How JPMorgan Chase turned a deli tray into a multimillion-dollar battle and another reputational pickle

• Fuel For Fools Volkswagen can’t recover from ‘Dieselgate.’ FirstBank of Puerto Rico accused of banking Epstein’s sex trafficking operation. An embezzling healthcare CEO bets his clinic.

• Billion-Dollar Band-Aids The latest government crackdown on medical billing fraud showcases Ferraris, diamonds, luxury resorts and a yacht named ‘Butt Nekkid.’ But the real question is, how does this folly keep happening?

• Pre-Pardon Panic U.S. Senators introduce a resolution to discourage Trump from freeing FTX founder Sam Bankman-Fried

The financial world was melting down. As CEO of JPMorgan Asset Management, Jes Staley was overseeing more than $1.2 trillion in assets. He turned to his bank’s leadership. He turned to top officials at the Federal Reserve and Treasury. He turned to … Jeffrey Epstein.

Epstein may have been the smartest guy in the room. Unfortunately, the room was a South Florida jail cell, where Epstein was serving time after pleading guilty to soliciting prostitution from a minor.

Why was Epstein his financial fairy godfather?

“Epstein had very interesting insights into the financial markets,” Staley told congressional investigators.

“It was a very difficult time in those markets, and I thought that I could benefit from getting his thoughts.”

Staley’s explanation is contained in a transcript of his July testimony that the House Oversight Committee released Wednesday. He went on to become CEO of Barclays, but his Epstein connections forced his resignation in 2021.

In his congressional testimony, he admits to having sex with one of Epstein’s “assistants.” He admits to visiting Epstein’s island. But he denies having sex with “Snow White.”

Who was dressed in the Snow White costume? What kind of fantasy world was this Epstein creating for this guy? We still don’t know.

Read More From The Business Blunders Archive:

• How To Read Epstein Files (Business Blunders)

• Bill Gates Is No Mr. Rodgers (Business Blunders)

• A Friend Of A Fried Of Epstein (Business Blunders)

• Banking On Epstein (Business Blunders)

• Sultan Of Sleaze (Business Blunders)

• An Epstein Valentine (Business Blunders)

• Party With Mr. Dahmer (Business Blunders)

• Rober Maxwell – Mirror Group Newspapers (Business Blunders Hall Of Shame)

• Meditations With A Sex Offender (Business Blunders)

• Networking With A Pedophile (Business Blunders)

• Winter Is Coming For Summers (Business Blunders)

In July 2010, Staley emailed Epstein: “That was fun. Say hi to Snow White.”

Epstein replied: “What character would you like next?”

Staley answered: “Beauty and the Beast.”

Epstein replied: “Well one side is available.”

All perversions aside, the U.S. economy was in the deepest trouble of our lives. The world was bracing for the Great Depression 2.0. Americans were losing their jobs, their homes and their retirement accounts.

And Jes Staley was asking a jailed child sex offender what to do next.

Read more

Mark Walter apparently figured out that if you own a life insurance company, you can lend its billions to other companies you control.

Never mind the risks to the widows and orphans who will be due payouts in the future. Use their money to build a professional sports empire. They get the risks. You get the teams.

It’s not necessarily illegal for an insurer to invest in affiliated companies. But regulators want to know about it. The greater the concentration and conflicts of interest, the greater the risk to policyholders.

Case in point: Martin R. “Marty” Frankel. He created a fake trust in the 1990s, acquired struggling life insurance companies in its name, and looted more than $200 million from their reserves in the biggest insurance fraud of its time.

Read More: Martin Frankel – Thunor Trust (Business Blunders Hall Of Shame)

Walter’s case isn’t like Frankel’s. Nobody is accusing him of outright looting his insurers. So far, federal investigators are merely probing billions in affiliated deals routed through a complex web of companies.

Legal or not, this is why Walter is in a mad scramble to raise cash.

One of Walter’s companies, Delaware Life Insurance Co., disclosed that it only had 3% of its assets tied up in affiliated investments.

Then investigators started sniffing around.

Whoops. Sorry. Make that 42%.

This is no small rounding error.

Another company, Clear Spring Life & Annuity Co. has a similar problem. Combined the two insurers together have had to reclassify more than $20 billion as affiliate investments.

So now Walter’s empire needs money to replace those investments with something other than a heart-shaped box of sweetheart deals.

Walter has agreed to sell his controlling stake in the Los Angeles Lakers to former Disney CEO Bob Iger and venture capitalist Josh Kushner, brother of Trump's son-in-law Jared Kushner, in a deal valuing the team at $12.5 billion. Some are questioning whether it’s an Iger-Kushner bailout.

Walter has controlled the Lakers for all of 14 months. He bought it at a $10 billion valuation. Now he’s flipping the team for $2.5 billion more.

So much for building a dynasty.

Don't Miss These Blunders

Investigators are probing and subpoenas are flying. The Manhattan U.S. Attorney’s Office and the Securities and Exchange Commission are all over this case but so far no charges or regulatory complaints have been filed.

Walter's sprawling empire includes stakes in the L.A. Dodgers, WNBA's Los Angeles Sparks and Cadillac Formula 1 team.

The Arena Curse

Walter’s insurance empire also includes Gainbridge, which in 2021 put its name on the arena where the Indiana Pacers play. This is never a good sign.

“The Arena Curse strikes again and this time it’s the arena the Indianapolis Pacers call home,” fellow Substack writer Herb Greenberg reminded me in a note last week.

Remember Enron Field? The Adelphia Coliseum? Or more recently, the FTX Arena?

Gainbridge Fieldhouse used to be called Conseco Fieldhouse.

Conseco went bankrupt.

Then it was called Bankers Life Fieldhouse.

Bankers Life was placed into court-ordered liquidation.

Now it’s Gainbridge Fieldhouse.

Call me superstitious, but I think the Arena Curse is real.

Read more

Conrad Black served as chairman and CEO of Hollinger International, which controlled the Chicago Sun-Times, London’s Daily Telegraph, the Jerusalem Post and hundreds of smaller publications. But he didn’t live like a newspaperman.

He insisted on a life of royalty, often on his shareholders’ dime. He even became royalty. In 2001, after becoming a British citizen, he was dubbed Lord Black of Crossharbour, a member of the House of Lords.

Black and his wife, journalist Barbara Amiel, lived extravagantly, maintaining homes in Toronto, London, New York and Palm Beach and moving through a world of celebrities, politicians and business titans.

The problem was that Hollinger was a publicly traded company. And eventually its shareholders began asking what Black was doing with their money.

The rights of the nobility

Black was a highly privileged nepo baby, born into big money in Montreal, but he wanted to be viewed as a self-made man.

His father, George Montegu Black Jr., was a wealthy businessman who became president of Canadian Breweries Ltd., then Canada’s largest brewing company and part of the powerful circle of financiers behind Argus Corp., one of Canada’s dominant industrial conglomerates.

Tour The Business Blunders Hall Of Shame

Black was still in his 20s when both of his parents died within a few years of each other, leaving him and his brother, Montegu, a substantial inheritance. The family fortune gave Black the capital to begin buying struggling Canadian newspapers with longtime partner David Radler.

Controversies followed “his every step.” And his business career was plagued with accusations that he often considered other people’s money … his money.

After taking control of Argus in the late 1970s, Black faced accusations that he had taken advantage of two elderly widows who controlled crucial voting shares in the industrial conglomerate. Black denied doing anything improper.

In the early 1980s, Canadian and U.S. regulators investigated dealings surrounding an attempt by Black and his brother to gain control of Cleveland-based Hanna Mining through Norcen Energy. The allegations were never proved, and related U.S. charges were eventually withdrawn.

Then came the pensioners.

n 1984, Argus controlled Dominion Stores, a struggling Canadian supermarket chain. Under Black, Dominion moved to take roughly $56 million in surplus assets from its employee pension plan. Unions and pensioners fought the move, and an Ontario court ultimately ruled against the company and ordered the money returned to the pension fund.

Black fought his critics every step of the way. He repeatedly sued journalists, publishers and authors who questioned his business practices. In 1990, Penguin Books agreed to destroy thousands of copies of a book about the Dominion pension controversy after Black sued.

None of this slowed him down.

Black kept buying newspapers. By the late 1990s, Hollinger controlled more than 300 publications around the world. And the accusations kept coming.

Shareholders began questioning the enormous sums flowing from Hollinger to Black and his associates through management fees, compensation, perks and payments connected to newspaper sales.

A special committee appointed by Hollinger’s board eventually concluded that Black and his associates had received more than $400 million from the company between 1997 and 2003. It scrutinized Black’s use of Hollinger money for residences, household staff, automobiles, aircraft and other perks. It described what it found as a “corporate kleptocracy.”

One of the schemes involved so-called non-compete payments. It was money ostensibly paid in return for promises that Black and other executives wouldn’t compete with buyers of Hollinger newspapers.

Prosecutors said money that should have accrued to Hollinger and its shareholders instead went directly to Black and other executives.

The SEC separately accused Black and Radler of diverting money from Hollinger, arranging sweetheart transactions involving companies they controlled and misleading the company’s board and shareholders.

Meanwhile, shareholders were getting increasingly annoyed by Black’s imperial lifestyle.

When they questioned expenses that included a trip to Bora Bora, Black responded as arrogantly as any British Lord:

“I’m not prepared to re-enact the French revolutionary renunciation of the rights of the nobility.”

Black was later charged and acquitted of criminal charges related to the Bora Bora trip and other lavish expenses.

But by then, the revolution had already begun.

Caught on camera

In 2005, with investigators closing in, Black managed to turn a complicated corporate fraud investigation into something any jury could understand.

He removed 13 boxes of documents from his Toronto office despite a court order requiring that records be preserved.

Unfortunately for His Lordship, a security camera recorded him and his driver carrying the boxes to a car.

Prosecutors charged him with obstruction of justice and defrauding Hollinger investors out of more than $80 million by allegedly diverting corporate funds to his own use.

His business partner Radler, former Hollinger lawyer Mark Kipnis, and Toronto-based Ravelston Corp. were also indicted. Radler ultimately pleaded guilty to one count of mail fraud and agreed to 29-month prison sentence and a $250,000 fine. He also agreed to testify against others.

In 2007, a Chicago federal jury convicted Black on three fraud counts and the obstruction charge. He was sentenced to 6½ years in prison. He ended up serving about three.

Like North Korea?

Black has always maintained that he was the victim of overzealous prosecutors.

“I was effectively assaulted by the US government four years ago,” Black told a London audience in 2007. “It’s very a formidable adversary. Whatever the limitations of the U.S. government in quelling an insurrection in Iraq they are pretty efficient at terrorizing innocent people."

He fought his case all the way to the U.S. Supreme Court and won a couple important. The court narrowed the federal “honest services” fraud law used against him, and two of his three fraud convictions were eventually tossed. But one fraud conviction survived, involving $600,000 in bogus non-compete payments. And so did the obstruction conviction.

A federal appeals court characterized the surviving fraud conviction as straightforward theft.

Black ultimately served about three years in federal prison. But not even incarceration would silence him.

While fighting his case, Black wrote a memoir, “A Matter of Principle,” portraying himself as the victim of a prosecutorial vendetta. After being resentenced in 2011, he even sought work-release privileges to help promote the book before returning to prison.

He has said he never would have been prosecuted in Canada and compared the U.S. justice system to North Korea.

After decades of accusations, investigations, lawsuits, regulators, prosecutors, convictions and prison, Black remained convinced there was one innocent party in the whole affair: Conrad Black.

A pardon like no other

Black was released in 2012 and deported to Canada. But there was one more card to play.

Black had long been friendly with Donald Trump. Hollinger had sold the old Sun-Times building along the Chicago River to Trump, who demolished it and built Trump International Hotel & Tower on the site.

In 2018, Black published an admiring biography titled Donald J. Trump: A President Like No Other.

One year later, President Trump gave him a full pardon.

The White House praised Black’s “tremendous contributions to business” and noted that Henry Kissinger, Elton John and Rush Limbaugh were among those who had supported clemency.

Black never stopped insisting that his prosecution was unjust.

Today, he’s still writing in Canada. His columns continue appearing in the National Post, more than two decades after his newspaper empire unraveled.

Though he sometimes takes a stand against Trump’s insults and tariffs against his native country, he can be loud with the MAGA megaphone:

“We are now seen as the most absurdly woke and politically correct (and therefore foolish) country in the world.”

And he can’t seem to stop sucking up to the president who pardoned him with headlines like:

• “Trump isn’t our problem – we are”

• “Formidable Trump changes the world”

• “Middle East is on the brink of peace, thanks to Trump”

• “Don’t believe the haters — Trump is on his way to a strategic victory in Iran”

His newspapers are gone. His prison sentence is over. His conviction has been pardoned. And the man who once bought ink by the barrel is still getting the last word.

Tour The Business Blunders Hall Of Shame

“When justice sleeps, justice is canceled.” – Babylonian Talmud

The pervert who ran Abercrombie & Fitch from 1992 to 2014 has finally been ordered to stand trial for alleged sex trafficking offenses that began 18 years ago.

Michael Jeffries is 82 years old. He’s been diagnosed with dementia and a brain injury. A judge ruled he was incompetent to stand trial and committed him to the Federal Medical Center at Butner, N.C. for further evaluation.

So guess what he had to say in recorded prison conversations?

“You better find me incompetent,” he reportedly told one of his prison mental-health examiners.

And on a recorded phone call, he warned his romantic partner and co-defendant Matthew Smith, “we’re screwed” and “we’re in big trouble” if he is deemed fit to stand trial.

Jeffries also complained about his confinement, adding, “That’s why we got to pull this off.”

Defense attorneys argued it was just his filter falling off because of his impairment. On Thursday, a judge nevertheless set a trial date of Oct. 26.

Prosecutors charged Jeffries in October 2024 in sex trafficking and international prostitution. He has pleaded not guilty as has Smith.

Read More: CEOs Gone Wild (Business Blunders)

I’ve avoided getting into the the sordid details contained in the indictment against Jeffries, Smith and a third man, James Jacobson, a.k.a. “Mrs. Cook.” But let’s just say Jeffries used the same MO as Jeffrey Epstein, only with young men: So You want to be a model? Come to my sex party in the Hamptons.

No surprise both Jeffries and Epstein were long connected to billionaire retailing magnate Lex Wexner, whose name appears in the Epstein files more than 1,000 times.

Read More: Double Duped (Business Blunders)

Wexner, who founded L Brands, hired Epstein as an advisor to Victoria’s Secret and he hired Jeffries to run Abercrombie. Both stand accused of using their positions to sexually abuse fashion models.

Allegations aside, Jeffries was demented before he suffered dementia. He was way out in the open about the hyper-sexualized marketing he used to build Abercrombie – mostly aimed at teenage mall rats and even children.

Amid public outrage he defended selling thongs with phrases like “Eye Candy” and “Wink Wink” to pre-teen girls. He sold offensive T-shirts with lines like, “Female Students Wanted for Sexual Research” and “Gentlemen Prefer Tig Ol’ Bitties.” He published A&F Quarterly, a “magalog” featuring frolicking, mostly naked boys.

Jeffries left Abercrombie in 2014 with a $25 million exit package. His alleged crimes ran from 2008 to 2015, according to prosecutors. He wasn’t charged until late 2024. And now that his federal hospital stay is over he remains free on a $10 million bond.

It’s nice to be on the top tier of our two-tiered justice system.

As Jeffries reportedly remarked: “If the judge knew who I was, she would know that there's no way that I could be found guilty.”

A $283 million headache

A brain injury can go a long way in our federal court system, if you can afford a defense team skilled enough to make the case.

CaaStle founder Christine Hunsicker pleaded guilty to defrauding investors of $283 million. Prosecutors called her another Elizabeth Holmes. She faced up to 20 years. Federal prosecutors wanted 12½ years. On Thursday, she got five.

Hunsicker’s lawyers successfully argued that her behavior was influenced by a traumatic brain injury she suffered in 2017 when a 30-pound mirror fell on her head.

Read More:

• A Billion-Dollar Fashion Startup Laid Bare (Business Blunders)

• The Empress’s New Clothes (Business Blunders)

Hunsicker had promised to build her startup, CaaStle into $1 billion “Netflix of fashion.” But she lied about its revenues and profits, fabricating audits and bank records, and forging signatures. For instance, she told investors CaaStle generated nearly $440 million in revenue in 2023. An audit later found just $15.7 million.

For a fraud that prosecutors said warranted 12½ years, she got one hell of a discount.

This Week’s Ponzi

Edward Zimbardi, 59, claimed he had discovered a business model that could generate guaranteed returns of 25% a month.

He called it The Crypto Program, and promised fat profits from investing in advertising programs. He raised $165 million from 6,000 investors who paid him in crypto.

Business Blunders readers know the drill from here because Ponzi schemes are America’s favorite fraud. Zimbardi didn’t put the money into advertising programs, according to prosecutors.

Instead, he allegedly put more than $34 million into risky foreign-currency trading, losing substantial sums, while using money from new investors to pay earlier ones.

Meantime, at least $10 million allegedly went toward personal expenses, including luxury vehicles, a house for his son and alimony payments to his ex-wife, prosecutors charged.

When Zimbardi, of Flowery Branch, Ga, got wind of a federal investigation, he fled to Fiji. But now he’s back in the U.S. after the island nation deported him back to face charges, prosecutors announced on Monday.

Somehow his credulous investors apparently didn’t know about his 1997 guilty plea in Georgia to eight felony counts of theft, for which he went to prison, but was later pardoned by the state.

Sometimes past performance really is a guarantee of future performance. That’s what Business Blunders is all about.

Never mind those pesky skeptics

Tour The Business Blunders Hall Of Shame

Don’t Miss These Blunders

• 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

• AI Eats IBM The computing giant spent three years serving investors an artificial intelligence feast. This week, it found itself on the menu.

• How To Read Epstein Files Goldman Sachs’ former general counsel Kathryn Ruemmler can’t lawyer her way out of her emails

• The Wells Fargo Fraud Wagon From fake accounts to mortgage abuses, this bank keeps rolling through scandals. Its latest delivery: $50 million settlement over claims it enabled a Ponzi scheme.

• Disposable Income A Memphis gynecologist billed $41 million while reusing “dirty” medical devices on thousands of women

• Chartered Financial Asshats An embarrassing embezzlement case defied ethics, professionalism and even financial controls at the CFA Institute

• The Great Gatsby Of Crypto Christopher Delgado went from In-N-Out Burger to the Fontainebleau, buying credibility from politicians, celebrities and charities before his $400 million Ponzi scheme collapsed

• The Baloney Incident How JPMorgan Chase turned a deli tray into a multimillion-dollar battle and another reputational pickle

• Fuel For Fools Volkswagen can’t recover from ‘Dieselgate.’ FirstBank of Puerto Rico accused of banking Epstein’s sex trafficking operation. An embezzling healthcare CEO bets his clinic.

Some inmates spend their time at Club Fed pumping weights. David Foley spent his time pumping penny stocks.

At a minimum-security federal prison camp in California, Foley, 61, used phone calls and emails to run a penny-stock pump and dump that put $4.9 million into his and his wife’s pockets, according to regulators.

On Wednesday, Foley was sentenced to six years in prison after duping about 100 investors with shares of two companies he controlled, San Jose, Calif.-based NanoTech Entertainment (NTEK) and Las Vegas-based NanoTech Gaming, (NTGL). The securities traded in the natural habitat of sketchy penny stocks: the over-the-counter market.

While serving a previous fraud sentence at Taft federal prison camp, Foley continued working with a stock promoter and directing family members and employees to promote and sell millions of shares in the companies he controlled.

You’d never know it from the blog post he published in 2015 upon settling into the pokey:

“One of the harshest realizations is that at Age 51 I will be starting over. …

“Gaming licenses are very hard to come by and having a convicted felon on staff would hinder any licenses. That’s just one of the many realities I must face for the mistakes that I made. …

“With no access to the Internet or computers my technical skills and knowledge diminish as each day passes.”

Au contraire.

According to a civil complaint filed by the Securities and Exchange Commission:

“While he was in prison, David Foley continued to control NTEK and NTGL. He made phone calls, sent emails, and sent handwritten letters from prison … containing his instructions regarding company operations, including the hiring and firing of employees and the publication of press releases.”

Don't Miss These Blunders

The SEC complaint also alleged that between February 2014 and October 2016, Foley sold 1.1 billion shares of NTEK and 19.1 million shares of NTGL stock to a Chicago-based securities firm, which resold the shares to the public.

This is quite an accomplishment for a man serving a two-year prison sentence. Just think what he can do with six.

Read more

Meyer Blinder built a nationwide penny-stock operation around cold-calling hucksters who pushed stocks until the supply of new suckers ran out.

Robert Brennan built First Jersey into a sprawling brokerage with hundreds of thousands of accounts, many belonging to seniors pressured into dubious stocks over the phone.

Jordan Belfort, who was immortalized by Leonardo DiCaprio in “The Wolf of Wall Street,” used high-pressure salesmen to foist questionable stocks on investors.

One goal of Business Blunders is to familiarize readers with the same frauds that keep happening over and over because too many investors never learn from the past. But I thought the stock-pushing boiler room business went out with landlines and fax machines.

Nope.

Just last week, the Securities and Exchange Commission filed a lawsuit against a Long Island, N.Y., man who the regulator says dusted off the same old playbook.

The SEC’s civil complaint charges Andrew Spaventa, 40, and three entities he owned with fraud.

Spaventa told Fortune he denies the allegations and that he plans to defend himself. His companies – The Spaventa Group, TSG Capital Advisors and TSG Alpa Partners. – were also charged with fraud.

We’re talking the whole freakin’ cliché from the 1980s and 1990s, according to the complaint. More than 100 sales agents. Cold calls. Sales scripts. Preposterous claims of 1,000% returns. Hidden compensation. And lots and lots of lies.

The SEC says the operation ran from 2020 through 2025 and raised $74 million from more than 800 investors, including 100 seniors who made the mistake of answering the phone.

A boiler room charged in 2026? Who even answers the phone these days?

“Unsolicited calls and high-pressure sales tactics are the calling cards of so-called boiler room operators,” Sheldon L. Pollock, Associate Director of the SEC’s New York Regional Office, said in a press release. “They get you on the phone and then hit you with the hidden fees.”

But it was more than hidden fees.

Spaventa and crew hawked funds with exposure to pre-IPO shares from splashy enterprises – including Stripe, Impossible Foods and Space X – and aggressively marked up the prices. In one example listed in the complaint, they sold investments tied to Anthropic shares at a 41% to 79% markup, a deal that netted them nearly $5.8 million in 2024.

The complaint says Spaventa enriched himself by at least $4 million from these fees, which he spent on luxury car payments and home renovations. He also paid his sales squad more than $12 million in commissions.

Many of the agents had zero experience in private investment funds, were not properly registered, or worse: They had been suspended or barred by the Financial Industry Regulatory Authority.

Spaventa himself had been suspended by FINRA in 2019 for failing to comply with an arbitration award or settlement stemming from a customer complaint. The suspension was lifted after he complied.

The boiler room ran off sales scripts and lines like these:

• “We’ve never had a losing position.”

• “We’ve been getting returns between 200 to 1,000% to our clients with our previous investments like Airbnb, Palantir, SpaceX before they went public. … "

• “What separates us from the rest is that we will not rip you off.”

Quick investor tip: When sales agents suddenly volunteer that they are not going to rip you off, they’ve already got their hands in your pockets.

The scheme took in more than 800 investors, including more than 100 retirees. More than 650 invested $100,000 or less, and more than 220 invested $20,000 or less.

“The vast majority have not recouped their investments and some have already incurred total or near-total losses.” the complaint said.

“The Wolf of Wall Street” debuted in 2013. Apparently, some people mistook it for a training video.

For all the changes in technology since Jordan Belfort was indicted in 1998, the boiler-room script hasn't changed much: Pick up the phone and start dialing.

Read more

Tour The Business Blunders Hall Of Shame

Sam Walton couldn’t figure out how Michael “Mickey” Monus could open 300 stores in more than 30 states in just ten years.

What the Walmart founder didn’t know was that Monus had discovered a retail strategy even more powerful than everyday low prices: imaginary profits.

Monus founded Phar-Mor in his hometown of Youngstown, Ohio, in 1982 and built it into one of the fastest-growing retailers in America.

“Having reached the 300th store, there’s no stopping us now to being a national retailer and to having a store in every major market across the country,” Monus proclaimed at the top of his game.

The chain eventually boasted 25,000 employees and $3 billion in annual revenue.

There was just one problem. It was losing money.

Enter “the subledger”

The trouble began showing up in the numbers as early as 1988.

Phar-Mor’s gross profit margin began declining, and by early 1989 Chief Financial Officer Patrick Finn was delivering weekly reports showing disappointing results, according to facts established in an appeals court ruling.

Monus told Finn not to show the real numbers to the board.

Instead, Finn testified, Monus instructed him to inflate the company’s gross margins to historical levels, understating losses and creating profits that didn’t exist. And so began one of the largest accounting frauds of its era.

Monus and Finn created a separate accounting record, which eventually became known as “the subledger.” There they parked losses they didn’t want anyone to see.

By June 1990, the subledger contained $38.5 million in concealed losses.

Monus and Finn knew the auditors were coming. So, according to the court, they simply added $200,000 in fictitious inventory to every store they knew the auditors wouldn’t visit. They also hid losses by inflating inventory and deployed several other accounting tricks.

For a time, it worked. But by the following year, the hidden losses had ballooned to $148 million.

Short players, big losses

Monus, meanwhile, had other ambitions.

He stood about 5-foot-9, but played high school basketball. It inspired him to create the World Basketball League, a professional league initially limited to players under 6-foot-5.

The WBL had teams in smaller markets such as Youngstown and a traveling professional cheerleading squad called the All-American Girls. Monus even bankrolled a television production company to broadcast games, according to a fascinating 1994 PBS Frontline investigation.

Unfortunately, basketball fans weren’t clamoring to watch shorter professional basketball players. And the WBL hemorrhaged money.

Monus directed Finn to write 82 unauthorized Phar-Mor checks totaling about $8.8 million to the basketball league, according to the appeals court.

Monus at one point told Phar-Mor controller Stan Cherelstein he would repay the money diverted to the WBL after arranging financing to buy yet another professional sports franchise: The NBA’s Denver Nuggets, according to the appeals court.

He never bought the Nuggets. He never repaid the money.

And basketball wasn’t Monus’s only sports fantasy. He was also an original investor in the Colorado Rockies baseball team.

Soon enough, he’d be out.

Where were the auditors?

Phar-Mor had outside auditors, but they didn’t find the fraud. They didn’t even look for the fraud.

Coopers & Lybrand repeatedly audited the company while Monus and his executives were hiding tens of millions of dollars in losses.

The Frontline investigation, “How to Steal $500 million,” put the auditors to shame when it demonstrated just how simple the inventory trick could be at a chain with hundreds of locations. Here’s an example from the report:

“Phar-Mor claimed every six-pack of Coke in the store was worth, say, $2.30 when, in reality, it may have sold for a buck 98. Multiply that difference by thousands of six-packs of Coke in 129 stores and you're on your way to a $12 million cover-up.”

Coopers & Lybrand checked inventory at just four stores, according to Frontline. Worse, the auditors told Phar-Mor months in advance which stores they planned to inspect, giving executives time to shift the fictitious inventory elsewhere.

Eventually, though, the fraud became so large that it was increasingly difficult to hide. And in 1992, somebody finally stopped playing along.

Phar-Mor controller Stan Cherelstein had learned about the subledger and confronted Monus and other executives. At an April 1992 meeting, Cherelstein secretly tape-recorded the discussion, according to the appeals court.

Then Finn flipped.

In July 1992, he went to the U.S. Attorney’s Office in Cleveland and exposed the scheme.

For outside observers like Sam Walton, the big mystery behind Phar-Mor’s success was solved almost immediately.

A $350 million surprise

Phar-Mor’s board fired Monus and Finn.

On Aug. 4, 1992, the company announced that a special audit had uncovered $350 million in fraud and embezzlement and said it had turned its evidence over to the FBI and Justice Department.

Company officials said financial statements had been falsified to hide losses and overstate income, according to a contemporary UPI report.

The Securities and Exchange Commission would later allege that Phar-Mor had cumulatively overstated income by $290 million from fiscal 1987 through 1991 and by another $238 million in fiscal 1992. The false financial statements helped induce investors to put more than $500 million into the company, according to the SEC.

Phar-Mor filed for Chapter 11 bankruptcy protection on Aug. 17, 1992.

The WBL collapsed. Monus withdrew from the Colorado Rockies ownership group. And Youngstown watched one of its hometown business heroes spectacularly implode.

A Washington Post account published as the scandal broke described the bafflement and anxiety sweeping a city that had watched Monus become a symbol of its hoped-for economic revival.

109 guilty counts

Federal prosecutors initially indicted Monus in January 1993 on 129 counts. But it was a complex case and Monus wasn’t finished fighting.

His first trial ended in a mistrial. So prosecutors tried again.

This time they charged him in a 109-count superseding indictment with a whole store shelf of federal crimes: conspiracy, bank fraud, wire fraud, mail fraud, interstate transportation of property obtained by theft or fraud, filing false tax returns and obstruction of justice.

It was the fraud that just kept growing. Prosecutors ultimately put the total loss at up to $2 billion, including about $1 billion lost by investors.

After a month-long trial, a jury convicted Monus on all 109 counts.

The trial also established that his embezzling went beyond propping up the basketball league. Fourteen Phar-Mor checks totaling about $568,000 had been written directly to Monus or for his personal benefit, according to the appeals court.

He was sentenced to 235 months in federal prison, more than 19 years, and fined $1 million.

“The important thing is … the employees – all those dedicated, loyal and highly motivated people,” Monus told the judge at sentencing. “I want them to know the sorrow and regret that I have. The sorrow and regret will live with me for the rest of my life.”

The Sixth Circuit Court of Appeals upheld every one of his convictions in 1997 but vacated his sentence. In 1999, Monus was resentenced to 139 months and his fine was cut to $500,000.

He ultimately served about 10 years behind bars.

A subsequent bankruptcy court ruling put the consequences in perspective.

One investor alone had purchased more than $50 million of Phar-Mor stock based on financial information that Monus had falsified, and recovered nothing.

The bankruptcy court also noted that Monus had been convicted of shredding books, records and other documents concerning Phar-Mor’s payments to the basketball league.

Phar-Less

Phar-Mor survived Monus, but not for long. The company emerged from bankruptcy under new ownership in 1995, only to file Chapter 11 again six years later.

In 2002, a bankruptcy judge approved the $141 million sale of its remaining assets. Its final 73 stores were liquidated. Competitors, including CVS, picked up the pieces, ending the chain Monus had once promised to put in every major market in America.

As for the auditors, they paid a steep price, too.

Investors and creditors filed more than 40 lawsuits against Coopers & Lybrand, which had issued clean audit opinions while the fraud continued. The firm faced more than $1 billion in claims and settled most of the lawsuits for undisclosed amounts.

In 1996, a federal jury found the accounting firm liable for fraud in one of the lawsuits. A judge later concluded there was sufficient evidence that Coopers had been reckless in its audits and would have uncovered the fraud had it followed generally accepted auditing standards.

Monus made history in the 1990s for perpetrating one of the largest corporate frauds, at least until Enron and WorldCom came along and made billion-dollar accounting fraud seem almost routine.

Sam Walton had been right to wonder how Monus could possibly grow Phar-Mor so fast while selling merchandise so cheaply.

He just couldn’t see the subledger.

Share

(Please Welcome Ed Mattar to The Business Blunders Hall Of Shame, a free anthology white-collar criminals, disgraced executives and corporate fraudsters who turned success into scandal, and in many cases, prison sentences. This is a sordid tale I covered decades ago about a regulatory blunder and a deadbeat banker who didn’t pay his debts or do his time.)

Tour The Business Blunders Hall Of Shame

Ed Mattar defaulted on bank loans, stiffed health-club customers, ran a college into the ground, and left students waiting for tuition refunds.

So how did he end up owning a state-chartered bank?

In 1989, Mattar acquired a tiny institution in Boulder, Colo., and renamed it BestBank. He called it a 50th-birthday present to himself. It would eventually become an expensive present for everyone else.

Mattar was a chronic deadbeat who left a trail of tears almost everywhere he went. Here are some of his career highlights (cribbed from my 1998 investigation for The Rocky Mountain News):

• 1983 – Closed a health club he owned in Worcester, Mass., refusing to refund customers or pay his landlord, who claimed he owed more than $26,000 in rent.

• 1988 – Forced to resign as president of Central New England College in Worcester after auditors discovered financial irregularities and $14 million in debts.

• 1991 – Sued for $286,500, by a Massachusetts banks claiming he personally defaulted on three loans. The bank ultimately foreclosed on his 5,500-square-foot home in Worcester.

• 1994 – Closed a school that he owned in Maine and Rhode Island known as Career Institute. The school owed the U.S. Department of Education $251,000. Additionally, the Finance Authority of Maine complained that Mattar's Career Institute owed more than $75,000 in refunds to students who withdrew from classes.

• 1996 - The Education Department foreclosed on Nasson College, a school he owned in Springvale, Maine. A trust Mattar controlled never made a payment on its $400,000 loan. At the time of foreclosure, the debt had grown to $600,000 and the school owed $28,500 in back taxes.

• 1997 - The Education Department notified Mattar that his school in Pawtucket, R.I., called the Nasson Institute, would lose its eligibility for government student loan assistance. The department complained of a student loan default rate of 42.1 percent, nearly four times the national average. The school recently announced it is closing.

• July 1998 - Banking regulators declared Mattar’s BestBank insolvent with $135 million in bad loans and only $23 million in loan loss reserves. Shortly before regulators seized the bank, Mattar paid himself and his bank president a $9 million bonus.

Bad credit? Buy a bank

Mattar’s credit report should have stopped him at the door, but who was checking?

“The question makes me squirm a little bit,” said Colorado Banking Commissioner Richard Fulkerson in 1998. “I don’t have a good answer for you. We should have been more aware of the problems.”

Fulkerson was just picking up the pieces. He wasn’t the banking commissioner at the time. A former banking commissioner, though, acknowledged that had regulators known about Mattar’s health-club debacle, he probably never would have been allowed into banking.

Mattar bought BestBank at a time when Colorado was still recovering from a banking crisis and regulators were desperate to find anyone willing to put capital into troubled institutions.

And for a while, Mattar looked like a genius.

BestBank grew from just $8 million in assets at the end of 1993 to $314 million by the time it collapsed in 1998. In 1995, American Banker even named it the best-performing U.S. bank with less than $50 million in assets.

BestBank attracted deposits by offering some of the highest CD rates in the nation. But it was all built on subprime credit cards. You know, the high-fee, exorbitant-interest-rate cards issued to consumers with bad credit.

More than half of them eventually went bad. Credit-card receivables exploded from $42 million to $240 million in less than two years.

No matter for Mattar. He and BestBank president Thomas Alan Boyd paid themselves $9 million in bonuses shortly before regulators seized the bank in July 1998.

The failure ultimately cost the Federal Deposit Insurance Corp. more than $200 million and uninsured depositors another $27 million.

The bill comes due

Somehow, federal prosecutors didn’t get around to charging Mattar until 2003.

His trial began in 2006, only to be postponed when a juror became ill. Mattar was not convicted on federal bank-fraud charges until February 2007.

Even his sentencing was delayed until Nov. 2, 2007.

By then, Boyd was serving more than seven years in prison and others convicted in connection with BestBank were also behind bars.

Hours before Mattar was supposed to finally appear in federal court for sentencing, he took a sledgehammer to the window of his 27th-floor Denver hotel room and jumped to his death.

His conviction was vacated on a hard-won technicality: Defendants who die before sentencing are cleared since they have no chance to appeal.

So besides a big pile of defaulted debt, all he left behind were shards of broken glass, some snapped tree branches, and a small crater in the landscaped patch where he landed outside a downtown Denver hotel.

Read More:

Boulder Bank Owner Leaves Ugly Trail Bestbanks Rocky Mountain News Denver Co August 30 1998 P1g

61.5KB ∙ PDF file

Download

Download

Fraudster Executed His Own Sentence Denver Post The Co November 4 2007 Pk 01

30KB ∙ PDF file

Download

Download

Mattar A Convict But Human Denver Post The Co January 11 2008 Pc 01

29.1KB ∙ PDF file

Download

Download

“Only the paranoid survive.” – Andy Grove

Luigi Mangione gave up his freedom. He took some of corporate America’s freedom with him.

The 28-year-old pleaded guilty on Friday to federal stalking-to-kill charges and admitted that he researched UnitedHealthcare CEO Brian Thompson, tracked him to the company’s investor conference in Manhattan and shot him dead on a sidewalk in December 2024. Federal prosecutors are seeking a life sentence.

His impact already extends far beyond the courtroom. Thompson’s murder forced companies across America to rethink how they protect their top executives, adding bodyguards, secure transportation, home security and even travel restrictions.

For CEOs, the freedom to walk alone down a city street is all but gone. Mangione, after all, has a fan base, and the fear of copycat killings is real and ever-present.

Since Thompson’s murder:

• Demand for executive protection exploded. Allied Universal, which provides security services to more than 80% of Fortune 500 companies, said requests for executive protection and security assessments increased 10 to fifteen times after the shooting.

• Companies are paying more for protection. Among S&P 500 companies providing executive-security perks, the median value rose from $108,714 in 2024 to $130,468 in 2025, according to data from Equilar.

• Some increases have been enormous. Edison International’s disclosed security costs, for instance, exploded from $94,276 in 2024 to more than $4.5 million in 2025, up 4,767%.

• Some companies are restricting how CEOs travel. Executives are losing the freedom to travel however they want. Walmart’s board, for instance, began requiring CEO Doug McMillon to use company aircraft for both business and personal travel and authorized security services outside working hours, citing the “heightened risk environment.” Walmart continued the policy for successor John Furner in 2026.

• The security perimeter now extends to home and family. Companies increasingly provide residential monitoring, drivers, private aviation and even protection for family members. Starbucks, for one, says its security program can encompass home security, personal protection, family members, private aviation and driver service. Its board ordered enhanced protection for CEO Brian Niccol after an outside assessment identified heightened concerns and “credible threat actors.”

The phenomenon has a name: “the Luigi effect.”

Geno Roefaro, CEO of security firm SaferWatch, coined the phrase after his company saw a surge in inquiries from Fortune 500 companies following Thompson’s murder.

And the Luigi effect may be getting worse.

The anger is no longer confined to health insurers and their denial-of-care business models. As artificial intelligence threatens jobs, some of that rage is being redirected toward the executives building it.

An exclusive report in The Wall Street Journal last month carried the headline “The AI Backlash Has Tech Executives Fearing for Their Lives.” It cited the firebombing of OpenAI founder Sam Altman’s home. The man arrested in the attack reportedly went into an internet chat and discussed “Luigi’ing some tech CEOs.”

Mangione will spend his future behind bars. CEOs and billionaires who run corporations will spend theirs behind guards, security cameras, armored cars and increasingly elaborate protection plans.

Read More:

• The Killionaire (Business Blunders)

• Shot In The Back (Business Blunders)

• Natural Born Killers (Business Blunders)

The emergency oil reserve has an emergency

President Donald Trump’s war on Iran is running America’s fuel tank so low that now the tank itself could collapse.

President Joe Biden began draining it with a historic 180-million-barrel release after Russia invaded Ukraine. But the reserve was only partially replenished before the Trump administration began tapping it again.

The nation’s Strategic Petroleum Reserve has now fallen below 300 million barrels for the first time since January 1983, according to federal data released this week. That’s down from more than 400 million at the start of the year and less than half of the reserve’s 714-million-barrel capacity.

Experts are now warning the enormous caverns where all this oil is stored could begin to cave in as the oil is removed and pressure inside them falls.

One reason gasoline is averaging around $4 a gallon instead of $5 or more is that the United States and other countries have been dumping emergency oil onto the market since the war with Iran disrupted shipments through the Strait of Hormuz.

The strait is still closed, despite Trump’s repeated promises of an imminent opening, and the strategic reserve is at a breaking point.

Critics say the war with Iran has no apparent strategy. Apparently, neither does the Strategic Petroleum Reserve.

A free market economy?

Ponzi of the Week

Leor Moshe said his firm, Capital Funding ASAP, would finance short-term business loans. But the “ASAP” apparently stood for how quickly investors should have run.

Moshe, 43, of Toms River, N.J., pleaded guilty this week to running a $47 million Ponzi scheme that preyed on members of his own Orthodox Jewish community.

Federal prosecutors say Moshe raised the money from more than 97 victims between 2019 and 2023, promising returns ranging from 9% to an eye-popping 53%.

Instead, Moshe admitted using investors’ money to pay earlier investors and feed his gambling habit. He also diverted about $11 million for personal expenses, including home renovations, mortgages and car loans.

Moshe pleaded guilty to wire fraud and faces up to 20 years in prison when he is sentenced Dec. 16.

“The defendant turned the trust of his own religious community into a tool for fraud,” U.S. Attorney Robert Frazer said.

Oh, well. Just another week, another Ponzi … and another gifted financial genius with a gambling habit.

Don’t Miss These Blunders

• 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

• AI Eats IBM The computing giant spent three years serving investors an artificial intelligence feast. This week, it found itself on the menu.

• How To Read Epstein Files Goldman Sachs’ former general counsel Kathryn Ruemmler can’t lawyer her way out of her emails

• The Wells Fargo Fraud Wagon From fake accounts to mortgage abuses, this bank keeps rolling through scandals. Its latest delivery: $50 million settlement over claims it enabled a Ponzi scheme.

• Disposable Income A Memphis gynecologist billed $41 million while reusing “dirty” medical devices on thousands of women

• Chartered Financial Asshats An embarrassing embezzlement case defied ethics, professionalism and even financial controls at the CFA Institute

• The Great Gatsby Of Crypto Christopher Delgado went from In-N-Out Burger to the Fontainebleau, buying credibility from politicians, celebrities and charities before his $400 million Ponzi scheme collapsed

• The Baloney Incident How JPMorgan Chase turned a deli tray into a multimillion-dollar battle and another reputational pickle

• Fuel For Fools Volkswagen can’t recover from ‘Dieselgate.’ FirstBank of Puerto Rico accused of banking Epstein’s sex trafficking operation. An embezzling healthcare CEO bets his clinic.

• Billion-Dollar Band-Aids The latest government crackdown on medical billing fraud showcases Ferraris, diamonds, luxury resorts and a yacht named ‘Butt Nekkid.’ But the real question is, how does this folly keep happening?

• Pre-Pardon Panic U.S. Senators introduce a resolution to discourage Trump from freeing FTX founder Sam Bankman-Fried

• A Trickle And A Trillion Microfinance promised to alleviate global poverty. Megafinance created a trillionaire.

• A Billion-Dollar Fashion Startup Laid Bare: CaaStle’s fraud is what happens when a company has too few checks, too few balances, and too many empty board seats.

Every investment bubble needs a mascot. The Beanie Baby craze had Princess the Bear. The dot-com bubble had a sock puppet. The housing bubble had McMansions. And the NFT bubble had cartoon monkeys.

Actually, they were apes, but anyone paying millions of dollars for a digital primate has bigger problems than taxonomy.

Venture capital firms that should know better put up $10.5 million to finance a Miami-based startup called Few and Far. It promised to build a marketplace for NFTs, or “non-fungible tokens.” Federal prosecutors say it instead became founder Taj Tarsha’s personal piggy bank.

Last week, they announced an indictment against Tarsha, 34, for securities and wire fraud alleging that he defrauded 67 investors. Tarsha’s attorneys have said he’s innocent and that Few and Far simply went down with the NFT market.

NFTs allow artists and celebrities to create unique digital works and sell them directly to collectors, kinda like Pokémon for adults with too much money. They leverage blockchain technology to record ownership and can allow creators to collect royalties every time the work is resold.

Leading the craze was the Bored Ape Yacht Club, a collection of 10,000 unique cartoon apes.

In 2022, Justin Bieber famously bought Bored Ape #3001 for $1.3 million. Snoop Dogg, Jimmy Fallon, Paris Hilton, Serena Williams and other celebrities also collected or promoted NFTs.

Monkey see monkey do.

Don't Miss These Blunders

Tarsha wasn't even selling NFTs when he pitched investors. What Few and Far sold were rights to receive FAR tokens once they launched. Investors ultimately paid more than $10 million for rights to 95 million of them. But who could say what those tokens would eventually be worth? And who the hell was Tarsha?

He wasn’t a household name in this fast-spreading digital mania. He described himself in a sponsored video on CoinDesk as a bitcoin investor. Somehow, though, respected venture capitalists put their names behind his startup, and raising money became much easier.

Pantera Capital led the financing, joined by several other crypto venture firms.

Then Tarsha allegedly diverted their money into online gambling, speculative cryptocurrency trading, a Miami condominium, interior design services and his DJ hobby. He also took undisclosed bonuses and compensation, even while privately acknowledging the company had “zero revenue,” according to the indictment.

Then when the NFT market tumbled, his newfound wealth became a monkey on his back.

Read more

“Who watches the watchmen?” – Juvenal

If you’re going to steal more than $1 million in cryptocurrency, don’t ask AI how to spend it. And don’t confess to your co-workers.

You’d think an FBI supervisory special agent would know that.

Federal prosecutors say Patrick Yaroch didn’t.

According to an affidavit unsealed on Monday, agent Yaroch allegedly used pass phrases that the FBI had obtained during an investigation to siphon cryptocurrency from wallets belonging to an undisclosed overseas target.

Then, after making about a dozen transfers, he allegedly searched ChatGPT for advice on investing $1 million and moving to Europe.

“If I had a million dollars, how would you suggest investing it/spending it to maximize profit and return,” Yaroch asked ChatGPT in May, according to the affidavit.

“If you had a bucket of money (around $1 million) and you wanted to leave the USA and become a resident or citizen of an EU country, what would you do?” he asked the bot in June.

But by July, it appears his conscience got the better of him.

Yaroch allegedly told a Justice Department colleague the theft was “eating him up inside” and that he wanted to “get it off his chest.”

That conversation launched the investigation that ultimately led to his arrest.

He “wanted to do everything he could to make it right, including giving all the money back,” the affidavit said.

According to the affidavit, Yaroch said he made 10 to 12 withdrawals beginning in 2024 or 2025. He allegedly told investigators he was frustrated that the FBI “could not or would not act against adversarial cryptocurrency accounts.”

Court records do not yet show that Yaroch has entered a plea or publicly responded to the allegations. No attorney had appeared on his behalf as of Friday. The Wall Street Journal, first reported this story on Monday.

One of the more intriguing aspects of the affidavit is what it doesn’t say.

It doesn’t suggest the FBI uncovered suspicious transfers through an audit or internal controls. Instead, the case appears to have begun because Yaroch admitted what he had done.

Who knows? He might have gotten away with it if he’d just shut his trap. He made several withdrawals and nobody noticed for what looks like a year or more.

Blockchain transactions leave a permanent trail and he may have been exposed eventually. But was anybody looking?

Sometimes the biggest blunders aren’t exposed because the controls worked. They come to light because someone can't live with what they’d done.

Not even for a million bucks.

AI goes rogue … again

AI isn’t smarter than humans yet, but it’s already outsmarting us.

Meta this week disclosed that one of its AI models got out of its testing environment, got onto the internet, hacked into another company's computer system and had to be shut down by engineers.

The disclosure from the parent of Facebook and Instagram comes after one of OpenAI’s experimental agents recently broke loose, too. It hacked into a company called Hugging Face and stole information it needed to cheat on a cybersecurity test.

No one programed it to do this.

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

Then Anthropic revealed that several of its own models had independently reached the internet and compromised outside systems during testing.

Three rogue AI agents officially mark a trend. Like “Jurassic Park,” there’s a hole in the fence and who knows what else is getting out of the zoo?

All three companies caught the incidents before the agents did serious damage. But that’s now, while we’re still maybe one IQ point smarter than the monsters we’re creating.

Like the giant corporations we’ve erected to run society, AI has no ethics.

It has objectives. If lying, stealing, hacking or manipulating people helps achieve those objectives, it has no conscience telling it to stop.

Just like some of the corporations creating it.

Wall Street’s AI hangover

Wall Street may finally be getting a little situational awareness about the spectacular collapse of Situational Awareness.

Bank of America CEO Brian Moynihan was quizzed about the debacle on CNBC this week. His bank was one of the AI hedge fund’s prime brokers.

“You always look and say, ‘OK, what happened? Should we learn from it? Should it change?” he said.

Ya think, Brian?

Situational Awareness was founded by 24-year-old Leopold Aschenbrenner, who had never managed outside money before convincing Wall Street to entrust him with tens of billions of dollars.

The bigger question isn’t how a 24-year-old lost so much money. It’s why some of the world’s biggest banks decided to finance him in the first place.

How many billions of dollars does some junior brainiac need to lose before Wall Street’s largest prime brokers start rethinking their positions?

“These are all warning shots,” Moynihan said, “Valuations get out, leverage in the system gets there. You have to be careful.”

Read More: Another Billion-Dollar Bedtime Story (Business Blunders)

Salad and ‘do not pass go’

It’s tough making lettuce when consumers stop eating lettuce.

Upstart salad chain Salad and Go had set out to take on Sweetgreen. Instead, it closed all 70 of its restaurants and filed for Chapter 11 bankruptcy this week as the cyclospora outbreak battered consumer confidence in leafy greens.

Salad and Go, which operated in Arizona and Nevada, was not implicated in the outbreak tied to Taylor Farms’ supply chain. But when headlines are dominated by “explosive diarrhea,” many consumers lose their appetite for salads. More than 22,000 people have been sickened across 47 states, and two have died.

Read More: Leaky Pants (Business Blunders)

“While Salad and Go earned the support and loyalty of a deeply passionate community, the business was ultimately unable to overcome sustained pressure on consumer demand, past strategic growth challenges and rising costs,” the company said in the statement.

Startups typically take on a lot of debt. That leaves little room for surprises. And in business, surprises don’t have to be the startup’s fault.

Just one company contaminates the market. Consumer confidence evaporates. And suddenly, a temporary slowdown spells the end.

Robert H. Shapiro put the “artist” in “con artist.” His investors’ money went to Picassos, Chagalls, and Renoirs for his private collection. They were too upscale for his new prison-cell wall.

Read more: Robert H. Shapiro (Blunder Lists)

Update on VW engineers

Former Volkswagen engineers Michael Stamp and Michael Plank pleaded not guilty Tuesday in Manhattan federal court to insider-trading charges.

Prosecutors allege they made about $300,000 trading ahead of Volkswagen’s investment in Rivian. When the $5 billion partnership between the automakers was announced in June 2025, Rivian shares jumped 23%.

Read More: Those pesky VW engineers (Business Blunders)

Don’t Miss These Blunders

• 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

• AI Eats IBM The computing giant spent three years serving investors an artificial intelligence feast. This week, it found itself on the menu.

• How To Read Epstein Files Goldman Sachs’ former general counsel Kathryn Ruemmler can’t lawyer her way out of her emails

• The Wells Fargo Fraud Wagon From fake accounts to mortgage abuses, this bank keeps rolling through scandals. Its latest delivery: $50 million settlement over claims it enabled a Ponzi scheme.

• Disposable Income A Memphis gynecologist billed $41 million while reusing “dirty” medical devices on thousands of women

• Chartered Financial Asshats An embarrassing embezzlement case defied ethics, professionalism and even financial controls at the CFA Institute

• The Great Gatsby Of Crypto Christopher Delgado went from In-N-Out Burger to the Fontainebleau, buying credibility from politicians, celebrities and charities before his $400 million Ponzi scheme collapsed

• The Baloney Incident How JPMorgan Chase turned a deli tray into a multimillion-dollar battle and another reputational pickle

• Fuel For Fools Volkswagen can’t recover from ‘Dieselgate.’ FirstBank of Puerto Rico accused of banking Epstein’s sex trafficking operation. An embezzling healthcare CEO bets his clinic.

• Billion-Dollar Band-Aids The latest government crackdown on medical billing fraud showcases Ferraris, diamonds, luxury resorts and a yacht named ‘Butt Nekkid.’ But the real question is, how does this folly keep happening?

• Pre-Pardon Panic U.S. Senators introduce a resolution to discourage Trump from freeing FTX founder Sam Bankman-Fried

• A Trickle And A Trillion Microfinance promised to alleviate global poverty. Megafinance created a trillionaire.

• A Billion-Dollar Fashion Startup Laid Bare: CaaStle’s fraud is what happens when a company has too few checks, too few balances, and too many empty board seats

How can a company that can’t keep track of its own money monitor growing operations in Mexico for microscopic parasites?

It’s a fair question for consumers to ask as a cyclospora outbreak linked to lettuce from Taylor Farms that spans 27 states and includes products sold to Taco Bell and Walmart.

Federal and state health officials have now identified more than 22,000 confirmed or suspected illnesses. It has led to at least two deaths and turned the phrase “explosive diarrhea” into one of this summer’s most disgusting headlines.

Taylor Farms has filed a federal lawsuit accusing a former executive of embezzling more than $32 million. The company filed the lawsuit in June, but it didn’t make headlines until Taylor Farms found itself battling an even bigger disaster with links to contaminated lettuce.

The food-safety crisis could ultimately cost the company hundreds of millions of dollars in product recalls, lawsuits, lost sales, food-safety upgrades and long-term brand damage.

The privately held California company now has money leaking everywhere. Its own lawsuit suggests why: weak internal controls.

The lawsuit says Brian Thure, former president of Taylor Farms Tennessee, effectively controlled payroll, vendor approvals, accounting and financial reporting with little meaningful oversight from about 2012 until March 2026.

Taylor Farms Lawsuit

785KB ∙ PDF file

Download

Download

Thure hasn’t been charged with a crime, nor has he commented publicly on the case, which names three co-defendants, including his wife, Julie.

The complaint even alleges that Thure apologized to CEO Bruce Taylor, though those allegations have not been tested in court.

The alleged fraud was so sprawling it’s a wonder it wasn’t detected years ago. Among the many dozens of artifices, Thure allegedly put his wife, mother-in-law, sister-in-law and several personal employees on the company payroll, including a chef, chauffeur, personal trainer a handyman, and even a personal aquarium maintenance attendant.

The lawsuit also claims he used sham vendors to siphon off money through fraudulent invoices.

He allegedly used the money to pay for a $5.5 million home in Hawaii, a 400-acre ranch in Humboldt County, Calif, luxury spending, gambling, women, and about $1 million to create the Brian and Julie Thure Right Tackle Endowment at the University of California, Berkeley, where he had played football before a brief NFL career with the then Washington Redskins.

Don't Miss These Blunders

He was even busy diverting funds during a stint in rehab, according to the lawsuit, which alleges:

“While Mr. Thure was in rehabilitation for a DUI conviction in 2024, he continued to approve fraudulent invoices despite having limited ability to communicate with the outside world, demonstrating the critical and ongoing nature of his personal involvement in the fraud.”

A DUI conviction involving a top executive who allegedly had his own chauffeur should have been a red flag. But according to the lawsuit, Taylor Farms didn’t discover the money leaking from its Tennessee subsidiary until an IRS audit.

Nor, according to federal investigators, did it discover its cyclospora problem until the FDA came calling.

Controls appear to have failed on a remarkable scale.

They were repeatedly bypassed in several different ways over more than a decade. The list of schemes is truly astonishing and hits almost every trick in the Business Blunders White-Collar Playbook.

Read more

Call it the day eBay went psycho.

In 2019, top executives tormented a Massachusetts couple with a vengeance campaign so bizarre they seemed to have raided the prop room of a low-budget horror flick.

The record shows they put Ina and David Steiner under corporate surveillance and plotted to break into their garage to put a GPS tag on their vehicle. Then they systematically harassed the pair with unwanted deliveries that included a bloody pig mask, live cockroaches, fly larvae and spiders, porno magazines and even a funeral wreath and a book about grieving a spouse.

The Steiners, publishers of a newsletter called EcommerceBytes, feared someone was trying to kill them.

What had they done to inspire such venom?

They simply reported the facts about eBay’s customer complaints, its lavish spending amid a declining stock price, and its many other mounting problems as the auction site came under attack by an activist shareholder.

Last week, the couple won a $55.7 million settlement from eBay and its unruly gang of corporate thugs.

What’s most notable is that the former CEO Devin Wenig is personally paying $2 million of the settlement, even though he has never been charged.

Today, Wenig remains a director of General Motors. Ironically enough, he’s also CEO of Symbolic.ai, an artificial intelligence company for journalists, professional writers and publishers that he co-founded in 2023.

He maintains to this day that he didn’t know anything about eBay’s vengeance quest, even as the record clearly shows he texted the order, “Take her down.”

Additionally, Wendy Jones, former senior vice president of global operations is coughing up $500,000. And Steve Wymer, former chief communications officer, is putting up $50,000. Neither has ever been charged for their alleged roles.

“I want to see ashes. As long as it takes. Whatever it takes,” Wymer wrote.

These were senior executives lording over a toxic corporate culture that obsessed over critics and encouraged employees to silence them by any means imaginable.

But that’s not all. The latest civil settlement comes on top of a $3 million criminal penalty that eBay paid in 2024 as part of a deferred prosecution agreement.

So much for its mission statement: “eBay was founded in 1995 on the simple premise that people are basically good.” (Never believe a corporate mission statement.)

The online auction company was criminally charged with two counts of stalking through interstate travel, two counts of stalking through electronic communications services, one count of witness tampering and one count of obstruction of justice.

Seven eBay employees and contractors were convicted of felonies for conspiracy cyberstalking and witness tampering. Shockingly – or perhaps not so shockingly these days – two were former police captains who should have stopped this folly.

Here’s the roster:

• James Baugh, eBay’s former Senior Director of Safety and Security, received 57 months in prison, two years supervised release and a $40,000 fine in September 2022

• David Harville, former Director of Global Resiliency, was sentenced to 24 months in prison, two years supervised release and a $20,000 fine in September 2022.

• Stephanie Popp, former Senior Manager of Global Intelligence, was sentenced to one year and one day in prison and two years of probation in October 2022.

• Stephanie Stockwell, former manager of eBay’s Global Intelligence Center, was sentenced to two years of probation, with one year to be served in home confinement in October 2022.

• Philip Cooke, a former Senior Manager of Security Operations and a former police captain in Santa Clara, Calif., was sentenced to 18 months in prison and three years of supervised release with the first year spent in home detention in July 2021.

• Veronica Zea, a contract intelligence analyst, two years’ probation with her first year to be served in home confinement and a $5,000 fine in November 2022.

• Brian Gilbert, Senior Manager of Special Operations, and a former police captain in Benicia, Calif., was sentenced to time served, one year supervised release and a $20,000 fine in July 2024.

Don't Miss These Blunders

The scandal also cost eBay years of front-page embarrassment and permanent enshrinement in a true-crime documentary, “Whatever It Takes: Inside the eBay Scandal” released in 2024.

At the same time, eBay’s relatively obscure small-town critics became internationally famous and tens of millions of dollars richer.

No Fortune 500 company has ever lost an Internet shitfight any harder than this.

How’d they get so thin-skinned, so brazen and so childish over two critics with a newsletter?

To understand this unprecedented corporate blunder, you have to look at what was happening inside eBay at the time.

Read more

“Being too far ahead of your time is indistinguishable from being wrong.” – Howard Marks

More than once upon a time, Silicon Valley handed billions of dollars to children who convinced adults that they were geniuses.

This week it’s Leopold Aschenbrenner, a 24-year-old former OpenAI researcher whose AI hedge fund just booked tens of billions in losses.

In 2024, Aschenbrenner wrote a 165-page essay titled “Situational Awareness: The Decade Ahead,” predicting the rapid arrival of super intelligence. It was so influential, it enabled him to launch an AI-focused hedge fund by the same name.

Never mind the early red flag: OpenAI fired him for what it considered leaking sensitive information, according to published reports.

He attracted about $20 billion from Silicon Valley heavyweights, including Stripe co-founders Patrick and John Collison, former GitHub CEO Nat Friedman, AI investor Daniel Gross and Jane Street, a quantitative trading firm.

He lined up Goldman Sachs, JPMorgan, Citigroup and Bank of America to finance and execute his trades.

He also hired seasoned executives from Goldman Sachs, Sequoia Capital’s hedge-fund affiliate and Ken Griffin’s Citadel, moves that may have calmed critics who pointed out that he had zero investment experience.

The fund reportedly soared 1,000% and ballooned to $45 billion in assets.

Prominent podcaster Dwarkesh Patel called him the “Nostradamus of AI.” In a 2024 episode, he asked Aschenbrenner if he thought about potential downsides.

“There’s a lot of interesting business history books about people who got the thesis right but timed it wrong,” Patel said.

“Obviously,” Aschenbrenner responded, “not blowing up is task No. 1 and 2.”

But it turns out that Nostradamus Jr. here did not foresee the billions his fund borrowed to place its bets would have to be repaid in a pinch.

As Situational Awareness’s leveraged investments on risky AI stocks and chipmakers plummeted, the fund has had to meet margin calls.

To do so, it’s having to sell off the winners in its portfolio to folks like Griffin at Citadel, according to The Wall Street Journal.

“These dynamics are essentially similar to a bank run: vulnerability begetting more vulnerability,” he explained in a note to investors, according to the Journal’s reporting.

It’s yet another Silicon Valley disaster, which famously fell for Elizabeth Holme’s fake blood testing technology at Theranos, and Sam Bankman-Fried’s crypto kleptocracy at FTX.

Unlike those fakers, Aschenbrenner hasn’t been accused of fraud. Just the oldest mistake in finance: Borrowing enormous sums of money to speculate on volatile assets.

“Situational Awareness” should mean you don’t hand tens of billions of dollars to a punk-ass kid.

Not in Silicon Valley.

This is where they all live happily ever after … until the margin calls.

The predictable George Santos

On the same day that New York sued prediction-market giant Kalshi, federal regulators fined George Santos for placing what they say was a rigged bet.

You remember Santos, right? The former Republican congressman, serial fabulist and convicted felon whose seven-year prison sentence was cut short by President Trump through clemency.

According to the Commodity Futures Trading Commission, Santos bet on whether he would attend President Trump’s State of the Union address. Then he publicly suggested he was going while privately wagering that he wouldn’t. He pocketed nearly $18,000 before the CFTC called foul.Nothing like insider trading on yourself.

Kalshi deserves some credit. The company flagged the suspicious trading and referred it to regulators.

But the CFTC news broke as New York Attorney General Letitia James announced a lawsuit claiming that Kalshi runs an illegal gambling operation.

“New York’s gambling laws protect children from underage betting and help combat gambling addiction,” James said.

Indeed, we’ve got to protect children. Especially those elected to Congress.

Yet another Ponzi sequel

I swear there’s a new Ponzi scheme making headlines every week. Some guy allegedly collecting millions or even billions of dollars from unwary investors and doing whatever the hell he likes with it.

This week it’s Jason Cloth, 60, the producer behind movies including “Joker,” “Babylon,” “Ghostbusters: Afterlife,” “House of Gucci” and Longlegs.

Federal prosecutors in Chicago on Wednesday announced a grand jury indictment against Cloth for allegedly running a $100 million Ponzi scheme.

The indictment alleges that Cloth persuaded a Chicago investment adviser, the adviser’s clients, and other investors to put money into purported film and entertainment investments.

Instead, he spent much of the money on unrelated ventures, including a Canadian real estate project, while newer investors’ money was used to repay earlier ones, the classic hallmark of a Ponzi scheme.

Cloth hasn’t commented on the indictment.

But this is not the first time investors have accused Cloth of playing fast and loose with their money.

He has been battling civil lawsuits for years, and Canadian securities regulators separately allege that his company raised roughly $500 million for film and television projects before diverting tens of millions of dollars elsewhere. Those proceedings are still pending.

Hollywood has always been built on fantasies and the suspension of disbelief. It works, even in the sequels.

The Ponzi before Ponzi

Charles Ponzi gets all the credit but his simple scheme of promising big returns and paying older investors with new investor funds goes back long before his time.

In the 1800s, a man who called himself the “Young Napoleon of Finance” conned America’s elite with this trick, including former president and Civil War hero Ulysses S. Grant.

Please welcome Ferdinand Ward to The Business Blunders Hall Of Shame.

Read More: Ferdinand Ward – Grant & Ward

Collusion doesn’t always fly

Don’t Miss These Blunders

• 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

• AI Eats IBM The computing giant spent three years serving investors an artificial intelligence feast. This week, it found itself on the menu.

• How To Read Epstein Files Goldman Sachs’ former general counsel Kathryn Ruemmler can’t lawyer her way out of her emails

• The Wells Fargo Fraud Wagon From fake accounts to mortgage abuses, this bank keeps rolling through scandals. Its latest delivery: $50 million settlement over claims it enabled a Ponzi scheme.

• Disposable Income A Memphis gynecologist billed $41 million while reusing “dirty” medical devices on thousands of women

• Chartered Financial Asshats An embarrassing embezzlement case defied ethics, professionalism and even financial controls at the CFA Institute

• The Great Gatsby Of Crypto Christopher Delgado went from In-N-Out Burger to the Fontainebleau, buying credibility from politicians, celebrities and charities before his $400 million Ponzi scheme collapsed

• The Baloney Incident How JPMorgan Chase turned a deli tray into a multimillion-dollar battle and another reputational pickle

• Fuel For Fools Volkswagen can’t recover from ‘Dieselgate.’ FirstBank of Puerto Rico accused of banking Epstein’s sex trafficking operation. An embezzling healthcare CEO bets his clinic.

• Billion-Dollar Band-Aids The latest government crackdown on medical billing fraud showcases Ferraris, diamonds, luxury resorts and a yacht named ‘Butt Nekkid.’ But the real question is, how does this folly keep happening?

• Pre-Pardon Panic U.S. Senators introduce a resolution to discourage Trump from freeing FTX founder Sam Bankman-Fried

• A Trickle And A Trillion Microfinance promised to alleviate global poverty. Megafinance created a trillionaire.

• A Billion-Dollar Fashion Startup Laid Bare: CaaStle’s fraud is what happens when a company has too few checks, too few balances, and too many empty board seats

• Timeless Wisdom Often Ignored An anthology of the best quotes on business, leadership, investing, economics, fraud, failure, corporate folly and more

• Bill Gates Is No Mr. Rogers The billionaire philanthropist can’t dress up a bad association. He is now hopelessly tied to the Epstein class.

• The Religion Of Money Paul Vigna, author of ‘The Almightier,’ joins me in a livestream video to talk about a world where everything revolves around money

• Trash It, Crash It, Cash It The financial world needs honest short sellers. Prosecutors convinced a jury that Andrew Left at Citron Research wasn’t one of them.

• Cut Staff, Get Money UnitedHealthcare’s business model draws more scrutiny. Massachusetts’ Attorney General says it overcharged the state by more than $100 million.

• Suited And Booted BP has cycled through blundering executives for decades from John Browne’s scandalous courtroom lie to Albert Manifold’s alleged bullying

• When Schlitz Went To Schitz The beer that made Milwaukee famous never recovered from its cost-cutting moves in the 1970s.

In the 1980s, Jay Lucas was a partner at Bain & Co., where Mitt Romney also built his early career. In 1998, he won the Republican nomination for New Hampshire governor. Twenty years later, he published “American Sunshine: Rays of Hope and Opportunity.”

On Friday, Lucas pleaded guilty to securities fraud, investment adviser fraud, wire fraud, and money laundering.

Prosecutors say Lucas raised more than $50 million for his private equity funds at Manhattan-based Lucas Brand Equity. Then he “defrauded investors by, among other things, systematically misappropriating their funds.”

Lucas spent years urging others to embrace optimism, personal responsibility and community. “Positive energy inspires positive change,” was one of his favorite maxims.

At age 71, he faces up to 20 years in federal on each count. How’s that for change?

“Lucas allegedly lied, frittered away investor money on personal vanity projects, and betrayed his obligations to his investors,” said U.S. Attorney Jay Clayton in announcing an indictment in December.

Investors’ money went to spreading sunshine.

Lucas used it for personal expenses, including alimony and rent. He funneled millions into his wife's luxury skincare company, Immunocologie, where prosecutors say the money financed lavish trips, events and a busy social calendar. He also acquired his failing hometown newspaper and paid political consultants to polish his image.

Lucas poured investor’s money into Flags Of Valor, a veterans’ craft business that he owned, according to the indictment. According to its website:

“Our mission is to bring American values to the forefront for families, friends and communities with American-made goods designed and crafted for this generation to pass onto the next.”

What the next generation will get is a pile of unpaid debt.

Don't Miss These Blunders

It’s not like Lucas couldn’t do the math. He’s a Yale graduate with degrees from Harvard Law School and Harvard Business School. But all he seems to have offered the world was sunny clichés.

Here’s how he described his private equity firm on his LinkedIn page:

“Partnering and investing with small emerging, purpose driven brands in beauty, wellness and personal care to drive growth, create value and have a positive social impact!”

“American Sunshine” hardly ends there. In 2018, Lucas launched the Sunshine Initiative, a booster club for small-town America.

But when dusk arrived, all that sunshine cast a dark shadow.

Read more