

Silicon Valley Hustle: Former Motionloft CEO Accused Of Defrauding Investors - minimaxir
http://techcrunch.com/2013/12/30/motionloft-jon-mills/

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saumil07
Founders of early stage startups (as in, not AirBnB or Square or other
companies clearly in torrid scaling mode) heading to Vegas frequently on
chartered planes?

Yeah that doesn't scream RED FLAG at all.

I am honestly shocked at how poorly understood early stage startups really are
if this is true. Any half-decent founder knows to be frugal, treat every
dollar like it's their last and loses sleep over money in the bank (God knows
I do and have been for 3+ years after raising $5M+).

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mathattack
I've seen exact scam before. Young people flying on private jets with so-
called hot shot young entrepreneurs, only to find all the expenses on their
credit cards. There is no such thing as a free lunch.

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brandnewlow
Right after we did YC, a bunch of friends of mine who had decent amounts of
money asked if they could invest. I turned them all down. They were upset, but
we didn't NEED the money and there was no real way they could help us. Reading
this elicited a rush of "boy I'm glad I did that".

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andrewljohnson
This is a case of fraud and theft. I don't get why your takeaway is that it's
somehow unsafe, as a founder, to take legitimate investments from friends.
Were you planning on ignoring your company bylaws, pumping money into a secret
account, not papering the investments, and hiring an R&B star to serenade you?
Because otherwise I think you'd be OK.

A good reason not to take money is you'll probably fail, lose your friends'
money, weaken friendships, and feel like a douche. I don't think there is much
legal risk if you aren't totally nutso, and the board approved the
investments.

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brandnewlow
Right, your second paragraph describes the reasons why I turned my friends
down. This story's depictions of this guy's conversations with his 'friends'
about investing and their willingness to believe him due to external signals
they didn't understand ("Mark Cuban invested!") reminded me of my own
experience having those conversations.

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minimaxir
"I’m already getting anonymous emails saying this is just the tip of the
iceberg, with more accusations."

[https://twitter.com/ryanlawler/status/417875291873095680](https://twitter.com/ryanlawler/status/417875291873095680)

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jakemcgraw
Post-social network it's no surprise that people fall into these traps. Don't
invest in what you don't understand.

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morgante
Definitely an unfortunate situation, but also not surprising. Sounds like the
investors didn't do any real due diligence.

Just another reminder that it's rarely a good idea to exchange money with
"friends."

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knodi
Something doesn't sit right. Why would he tell them the company had been
acquired and $37.7mill had deposited in the escrow account. its not like he
can pull real cash out of his ass so he boxed him self in.

It makes zero sense. Something is not right here on both sides.

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PakG1
Why? Perhaps because he's a sociopath, perhaps because it was a case of
irrational escalation of commitment, perhaps because he was a childish idiot.
Lots of possible reasons. Why is it so difficult to consider the
possibilities? :-)

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krsunny
Sidebar: why do we say defrauding instead of just frauding? Isnt defrauding
the opposite of frauding?

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jessedhillon
In this case the Latin verb is _defraudare_ , and the French verb is
_defrauder_ so this may be a different usage. In general _de-_ can mean both
to take something away and to be of or about something. So this could be seen
as _about, of_ the taking of money through deception, i. E., through _fraud_.

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JAFTEM
Looks like Mills himself and investors involved are in the comments section
via FB (so they're using their real identities). One of the investors even
still believes in Mills and states he invested 48k.

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paulmcg
Lol at Cuban telling them not to go to the cops

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daeken
Honestly, it's the right move if they want even a chance at getting their
money back. Best case if they go to the police: a long court battle with Mills
in which they get a tiny fraction of their investment. At least this way has a
chance, and they can always go to the police down the road.

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badclient
Not necessarily. If this guy wrote bad checks, he may well be given an option
to make good on it to have his sentence reduced or removed.

A similar thing happened to a guy who scammed me and others. One of the guys
who was scammed went to the local cops who took out a warrant. The guy who
scammed us was arrested and released almost immediately. He paid the guy
through the court and his attorney. I still remain unpaid...and I didn't go to
the cops(mostly because nyc cops didn't care much about the case speaking to
them on the phone). You can read more here if you're curious:
[http://cliffkaplanfraud.com/](http://cliffkaplanfraud.com/)

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pge
Just another reminder of the old investing rule: if it sounds too good to be
true, it probably isnt true.

