

The fake vc - JayEnn
http://www.shaf.co/post/75399291209/the-fake-vc-eccentric-german-millionaire-and-the

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netman21
This brings back very uncomfortable memories. When I was 25 I was helping a
friend who was creating the first structural analysis software for the PC. I
introduced my friend and his partner to this strange guy in Dearborn,
Michigan. There were meetings at the airport and in his office in Dearborn.
This guy claimed to be a wizard at arbitrage and arcane financial instruments.
He said he worked out all the algorithms for Ford Motor for hedging copper
futures. He was overweight, had greasy hair, and, I kid you not, his back
pockets were usually turned inside out. We figured, eccentric genius. At least
at first. All he ever provided were excuses. He was waiting to flip some sort
of bond issue overseas that would give him $10 million, etc. That business
never got off the ground.

Then a year later my own partner and I got a call. We had been looking for a
manufacturing business to acquire. The crazy guy had a contact in Chicago who
was looking for an operations team to come in on a deal to acquire a
manufacturer of audio mixing boards. This company was still run by the founder
who had practically invented the industry. There were 50 employees and
customers included major studios and venues around the world, including the US
Senate and the Kremlin. The deal maker, lets call him DB, proposed that each
of four partners -the founder, me, my partner, and him- put $25K into a
holding company. He would arrange a $250K line of credit from the Korean bank
in Chicago that he was friends with. Then we would operate the company out of
bankruptcy. Well we three each sent him $25K (my dad lent me the money). We
did all the legal paper work, and I showed up the next day as one of the new
owners of a $3 million/year company. Very exciting for a 27 yr old. To make
the story short. DB was a complete crook. He needed $75K to pay off someone
else he had screwed and was threatening his life. The business shut down. 50
people lost their jobs. It took me years to get back on my feet financially.

~~~
shaf
I'm the author of the blog, I'm sorry to hear that. It sounds an order of
magnitude worse than my story. Luckily I didn't outlay any money or hand over
any important documents. It sounds like you should share your story too - I
wonder if there's a place somewhere people can share startup horror stories?

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tsunamifury
The Valley has been filled with these types since it became known for loose
money and fame. I've met perpetual VCs without money, Founders with no real
startup other than a logo and domain name, and name-dropping nobodies since
they first day I came here.

In general be suspicious of flakiness and an inability to meet any agreed upon
timeline, and always validate information in person when possible. Even if
they are real and show these attributes, you likely don't want them involved
with your business ventures anyways.

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AndrewKemendo
_None of these questions or tactics will be offensive to real angel investors.
In fact, they will give the real ones more confidence in you._

This is a big sticking point for first time founders because it by definition
turns the tables and now the founder is the one who is challenging the
supposed expert investor.

This can be tough for people to do if they aren't used to it.

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Dartanion7
This is absolutely insane. Why not out Fredo publicly?

~~~
loceng
It's a tough call. The behaviour isn't acceptable, and it's in fact very
harmful to others - and he'll continue to do it to others until he can't. When
he can't will likely be determined by a) jail time, though I'm not sure any of
the behaviour mentioned is actually illegal, or b) that he has no options for
work and job offers and no other possibilities because his credibility is
shot. Of course from my own experience with people who are like this, they
burn their bridges locally - and then just move to a different city where they
can be and act however they want again.

~~~
auvrw
> my own experience with people who are like this

have you met many of them? i mean, perhaps some people oversell themselves,
some might even tell outright lies -- but this guy fabricated entire
identities.

i'd like to think that this is not exactly commonplace.

but if it really is, then this kind of thing more common in the tech industry,
or does pretty much everything with a "business" angle attract a few people
like this?

~~~
anon1385
It's very common. This is what many self proclaimed 'business people' are
like. In places where aspiring business people congregate (like this site) it
will be dressed up with euphemisms about 'social hacking' and 'disruption'. Go
to some local startup/entrepreneurial meetups and you will find plenty of
people like this. If you are a developer you won't need to be there very long
before these types will be offering you all sorts of 'opportunities' and
'partnerships' that mostly just involve you investing your time and money on
the promise of getting rich quick, but with very little ever written down.
Plenty of kids fresh out of university get burned with these scams.

For an example, here in the UK the chairman of the current ruling party used
fake identities to run his dodgy web marketing/scraping/consulting business
and most people in the UK startup scene didn't think there was much wrong with
what he did. [http://www.theguardian.com/politics/2012/sep/21/grant-
shapps...](http://www.theguardian.com/politics/2012/sep/21/grant-shapps-posed-
web-guru)

>Grant Shapps, the Conservative party chairman, posed as a "multimillion-
dollar web marketer" named Michael Green who spoke to reveal the secrets of
his trade at a $3,000-a-head internet conference in Las Vegas while he was the
Tory party candidate for Welwyn Hatfield.

>The pictorial evidence of his double life, revealed online by a fellow
conference speaker, will pile pressure on Shapps to explain his links to a
network of websites which have been blocked by Google for breaching its rules
on copyright infringement and encouraging customers to plagiarise content.

>But at the age of 35, Shapps claimed already to have established "the world's
largest internet marketing forum". A few years later while a member of the
shadow cabinet, he also had time to run phone lines where for $297 an hour
Green would give tips to aspiring entrepreneurs.

>Casting himself as an internet marketing guru with products and coaching
services guaranteed to generate income, Shapps owned and ran until 2008 a
series of websites making claims that still dog him despite attempts to
downplay his personal role. Using the website MichaelGreenConsulting.com,
which operated from 2004 until it was removed from the internet in 2009,
Shapps claimed to run the "world's largest internet marketing forum" with his
company How To Corp.

~~~
loceng
I don't know about these individuals, though I feel there's a difference
between the business "act as if" people and someone who's a sociopath; Perhaps
they are the same though, just less extreme.

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danaseverson
What a fascinating story. Thank you for sharing it.

I totally hear you on fact that it was hard to see at the time, but obvious
now. You want to believe, which completely messes with your mind.

~~~
shaf
Thank you for reading it. It was very cathartic writing it, I'm just as
confused as I was then but at least I can take lessons from it and share with
others.

