This Week In Blunders – Nov. 1-7
“I don’t want yes-men around me. I want everyone to tell the truth, even if it costs them their jobs.” – Samuel Goldwyn
Your CEO calls. You recognize his voice. He needs you to wire millions of dollars overseas for a confidential corporate deal. You follow orders.
Then you discover it wasn’t your CEO. It was a guy who calls himself “Rocky Balboa.” And he’s just punched a multimillion-dollar hole in your company’s bank account.
Federal prosecutors in New York charged three men this week with using artificial intelligence to impersonate corporate executives and lawyers in an elaborate scheme that allegedly netted $129 million.
The defendants are Jacob Soall, 41, aka “Rocky Balboa”; Sharon Hazan, 54, aka “Superman Cash;” and Guy Sheetrit, 42.. Their alleged victims included banks, investment firms, hospitals and even a pet-food company.
The crew allegedly used AI-generated voices and images. They even impersonated attorneys at major international law firms who made them sign nondisclosure agreements.
Soall kept a handwritten script titled “Lawyer Call,” invoking insider-trading laws and confidentiality requirements to discourage employees from discussing the transactions with colleagues.
The alleged scheme exploited a familiar corporate weakness: Employees are conditioned to follow the boss’s orders, not second-guess them.
The alleged haul included $11.6 million from a British fintech company, $5.2 million from a Florida pet-food company and $4.6 million from a Massachusetts mutual fund company. They also allegedly stole millions from hospital systems in California and Missouri. Nice guys, huh?
Hazan is apparently seeking both fame and fortune as a career criminal. He was convicted of bank fraud conspiracy in 2008. And he allegedly boasted that he’d laundered more than $400 million and was “number one all over the world.”
The defendants face wire fraud, identity theft and money-laundering charges. All three were arrested overseas, and extradition proceedings were pending when prosecutors announced the indictment.
The alleged scheme relied on cutting-edge artificial intelligence, but it might have been foiled by land-line phone call.
Pro tip: When the boss calls demanding millions, hang up. Then call the boss.
High frequency hustle
People who trade stocks and commodities at home in their underwear often have no idea how badly they are exposed.
They’re up against high-frequency trading algorithms, lightning-fast computers and billions of dollars worth of sneaky tricks. Every once in a while, we get a peek behind the curtain.
Now Tower’s name has surfaced in another Wall Street courtroom drama.
Former Headlands Technologies trader Cheuk Fung Richard Ho is on trial in New York, accused of stealing proprietary trading algorithms the firm developed at a cost of more than $1 billion.
Prosecutors alleged that Ho used his employer’s secret trading program to launch a competing venture backed by Tower, a New York-based high-frequency trading powerhouse with more than 1,300 employees worldwide.
Ho, a Cambridge-educated computer scientist, denies the charges. His former employer Headlands, is a smaller Chicago-based rival with about 180 employees, and a billion-dollar investment in trading technology.
Tower disputes allegations that its technology incorporated Headlands’ trade secrets. Prosecutors say Ho deceived Tower, too. But it’s easy to be deceived when you’re in the high-frequency trading race.
Just ask the little guy at home who lost his shorts.
This Week’s Ponzi
Business Blunders encounters too many Ponzi schemes and it’s the same old story every week with a different punch line. When will people learn?
This Week it’s Royal Investments which called itself “The Company of Wealth & Trust.” Now that’s reassuring, hun?
Founder Kevin Patel, 40, of Pelham, N.H. raised about $2 million from friends and acquaintances, promising guaranteed, risk-free annual returns of 12% to 16%. Then he allegedly spent it on himself and used new investors’ money to pay earlier ones, like Ponzi schemers always do.
Patel was indicted Thursday on three federal wire-fraud counts.
It pays to check a financial whiz’s regulatory record before handing over your money. In 2021, Patel settled a New Hampshire securities case for $4,000 for selling unregistered investments.
Perhaps his company’s name and slogan weren’t too far off: “Trust me with your wealth. I’ll spend it royally.”
Don’t Miss These Blunders
CVS Goes To Seed. They tried to build a daisy chain. Now they’re in the weeds. And America’s healthcare costs keep mushrooming.
Blockhead Buddies On A Blockchain A felon pardons a felon and embraces a dictator. Any wonder why crypto exchange Binance got hacked for $6.3 billion?
Holiday In Cambodia Villa Vie Residences sold customers a permanent vacation at sea. Then it stranded them in Southeast Asia after failing to adequately hedge the one commodity a cruise line can’t operate without.
Rapist Rainmakers The Alexander brothers brought billions to Douglas Elliman while the prestigious brokerage allegedly ignored warnings of sexual assault. Now the firm is stuck with the fallout.
David H. Brooks – DBH Industries War made him rich. Fraud made him richer. A $10 million bat mitzvah made him infamous.
The Golden Age Of Grift Americans finally agree on at least one thing: Our politicians are ripping us off while an affordability crisis rages.
Jeffrey Skilling – Enron He left for ‘personal reasons.’ He had personally committed fraud.
Tiptoe Through The Escrow A New York attorney loaned $336 million in client funds to a 33-year-old apartment investor. Now Flagstar Bank is getting dragged into an alleged Ponzi scheme surrounding the mess.
Suicide Is Not Painless Executives, entrepreneurs and investors who died by suicide amid business failures, financial losses and corporate scandals. And a reminder that no business blunder is worth a life.
The Great American Rinse Cycle When Chinese money-laundering networks need a bank, where else would they turn but Bank of America?
Pharma Bro Can’t Help Himself Martin Shkreli went to prison. He was also banned from the pharmaceutical industry for life. Regulators say he keeps coming back for another dose.
Billy McFarland – Fyre Festival Prison didn’t end the party. It was just an intermission.
Desperately Seeking Diesel When Trump runs low on fuel, it’s ‘Fill ’er up, Vladimir’
100 Quadrillion Japanese Dogs Kishu Inu founder Alexander Sisemore allegedly bagged $9 million in a crypto ‘rug pull,’ dumping his secret stash of the meme coins on investors. Will crypto enthusiasts buy anything with a dog on it?
Jérôme Kerviel – Société Générale He cost his bank billions. But who left the vault door open?
If the Shoe Doesn’t Fit … Nike Can Wear It What a tech CEO didn’t know: People like to try on shoes before they buy them.
Don Lapre – The Making Money Show His greatest money-making secret was selling money-making secrets.
Charlie Javice – Frank She was startup wunderkind with student loan website. She gave JPMorgan Chase a $175 million education.
The Fake Andy Warhols The art was fake. The provenance was fake. Even the email address was fake. Now the dealer is missing.
Florida Man Takes Cops For A Ride It takes a lot of balls to rip off police. Pension administrator employee Michael D. Williams settles civil fraud charges without admitting or denying the allegations.
Scamway The granddaddy of multilevel marketing gets stuck with a record $225 million settlement as regulators finally crack down on Amway.
Catch And Release Kevin Kolenda kept getting caught selling bogus prize insurance. He never stopped casting for suckers.
The Sins Not Even Trump Can Pardon Nikola founder Trevor Milton got a presidential pardon. It won’t erase the financial consequences of his fraud.
LIV And Let Die LIV Golf can beg for a mulligan in bankruptcy court. But who wants to invest in a losing game?
Amazon’s Imaginary Friend Jeff Bezos’ e-commerce giant allegedly invented a bidder to drive up prices. Guess who pays.
Basketball Or Ballmer Ball? The NBA just suspended Steve Ballmer, its richest team owner, for allegedly making up his own rules.
No One Yelled Fore Good Good Golf is paying steep price after running, ‘the worst ad known to mankind’ and taking Callaway down with it.
Jes Staley’s Magic Kindom When Wall Street was melting down, this top JPMorgan executive sought a financial wizard. He turned to his pal, Jeffrey Epstein.
Flip This NBA Team Billionaire Mark Walter is scrambling to raise billions after his insurance companies reported a $20 billion investment blunder. Now he’s flipping the L.A. Lakers.