
FBI Reportedly Looking Into Angelgate - Cmccann7
http://www.bizjournals.com/sanfrancisco/blog/2010/09/fbi_reportedly_looking_into_angelgate.html
======
atomical
This is a great opportunity for McClure to do some product market research and
sell products to the bureau.

It's rare that such a large organization comes to YOU for a PROBLEM that they
are having and not just go DIRECTLY to ya MAMA (or the bank):

#1 Take chances. The other guy who didn't got off scotch free with no time
serving (web requests, ya twitter stream, nothin!).

#2 Hold ya own. Fast talkin ain't just for the guy on the other side of the
table. Let him know you have a dictionary and thesaurus too. Don't pull them
out so fast though!

#3 Haters hate, but you gotta love. If you aren't allowed to leave the room to
get coffee suggest a friendly game of thumb wars.

~~~
jacobolus
This really doesn’t have the same panache without the variable-sized red and
green letters.

~~~
atomical
Yeah, I cried a river that I couldn't express myself like that. Fake McClure
blog in the works? Maybe.

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gkoberger
I feel like this isn't going to go anywhere- after all, you can't prosecute
someone based on vague tweets and a witness (Arrington) that felt awkward.
It's possibly a few of the "uncomfortable" Angels will step forward with more
evidence, but I'm not convinced there's enough evidence to make a real case
out of it.

But then again, all I really know comes from TechCrunch blog posts.

~~~
netcan
Evidence for many (maybe most) cases is gathered at the interrogation stage.
The larger the group the likelier it is that an investigation involving
talking to the people there will uncover everything.

Cops can be good at their jobs.

~~~
andreyf
I would have thought that top VC's would be smart not to say a word about this
that isn't vetted by their lawyers. Except maybe Dave McClure :-P

~~~
andreyf
Err, the other obvious explanation is that whoever was at these meeting really
don't have anything to hide, and Arrington is grossly exaggerating the few
anonymous tips he's gotten.

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sublemonic
From the peHUB post[0] cited in the article: > _Arrington declined to say if
he had been contacted by law enforcement officials._

Could law enforcement force Arrington's silence if he _was_ contacted
directly? Or can we expect another post by him titled, "So the FBI walked into
my office..."?

[0] [http://www.pehub.com/83069/angelgate-is-“100-percent-
accurat...](http://www.pehub.com/83069/angelgate-is-“100-percent-
accurate”-says-michael-arrington/)

~~~
cdr
The answer is whatever creates more buzz - "declined to say" is the most
"interesting" way to say no.

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cletus
I have to plead some ignorance on this one: I'm familiar with Australian
securities law (at a very high level) but American securities law is of course
quite something else.

Price-fixing I'm not sure applies here. It normally applies on the sell side
but not the buy side. So if all the gas stations in the country said they
would charge $6/gallon that would be price fixing. If all the consumers said
they wouldn't pay more than $1.50/gallon then that's not price-fixing in the
same sense.

But which side the angel investors are treated as is open to interpretation.
It's also worth noting that this is investment rather than the sale of goods
or services so price-fixing, depending on the law, may not even apply.

Collusion is a little more interesting. Australia has very strict laws here
compared to the US (to both our benefit and detriment I suspect). I'm not even
sure how to begin at unravelling such a thing.

It strikes me a little odd that it's the FBI spearheading this. I would've
thought the FTC and/or the SEC would've been at the front of this. The FBI
means the DoJ doesn't it? Or is the FBI the enforcement arm for these kinds of
actions?

One disturbing possibility that would require FBI intervention: racketeering.
Take a look at RICO:

[http://en.wikipedia.org/wiki/Racketeer_Influenced_and_Corrup...](http://en.wikipedia.org/wiki/Racketeer_Influenced_and_Corrupt_Organizations_Act)

Trigger offences include securities fraud:

<http://en.wikipedia.org/wiki/Securities_fraud>

"Securities fraud, also known as stock fraud and investment fraud, is a
practice that induces investors to make purchase or sale decisions on the
basis of false information, frequently resulting in losses, in violation of
the securities laws."

Now that normally applies to companies but could it be applied to the
enticement of other investors? If angel A puts in money at $3m pre-money while
at the same time someone else is putting in money at $4m pre-money, enticed by
angel A (without A disclosing his or her better deal), couldn't that qualify
as securities fraud?

IANAL and it seems unlikely but when you get any securities malfeasance or the
appearance thereof the whole thing can really spider in all sorts of
unexpected directions.

~~~
_delirium
> So if all the gas stations in the country said they would charge $6/gallon
> that would be price fixing. If all the consumers said they wouldn't pay more
> than $1.50/gallon then that's not price-fixing in the same sense.

That's probably true with those examples, but antitrust law tends to ignore
large groups of individuals "colluding" in their personal retail purchases.
Companies that together exert significant market power get more scrutiny,
though; for example, if all the gas-station owners in Texas got together and
said that they wouldn't pay more than $1.50/gallon wholesale for gas from
refineries, that could be a Sherman Act violation. There have been a few cases
about "group boycotts" as well; whereas consumers can organize boycotts for
political or personal or whatever reasons, groups of companies organizing
boycotts of other companies will attract investigators looking into whether
the purpose of the boycott is market distortion.

~~~
cletus
I certainly don't claim the authority to determine if the Sherman Act applies
in this case (or in fact any case).

To summarize my earlier post the most interesting thing about this is that the
FBI is leading an investigation on this (if the story is true and indeed
"Angelgate" is the subject of that investigation). The FBI having jurisdiction
raises all sorts of interesting questions.

The lesser point was that the FBI investigates racketeering and the RICO
statutes have very broad application as written whether or not they've been
used that way to date.

Take the Sotheby's/Christie's price-fixing case. That was a civil matter was
it not? It bears some similarity to this (an important difference being that
the auction houses were providing a service whereas the angels are investing,
which legally speaking isn't quite the same thing).

------
damncabbage
I may smack the next journalist that uses the -gate suffix in a title.

~~~
xenophanes
Then, unlike the angelgate people, we'd know you were _definitely_ guilty of a
crime.

Violence is illegal, immoral, and quite uncool. You should be ashamed. But for
some reason you are proud to say this in public. How bizarre.

And don't reply that you were "just joking" as if that makes it ok. Violent
crimes aren't funny. If you think it's funny, you're basically denying it
really is a violent crime.

~~~
jrockway
Rape and murder are violent crimes. Smacking someone causes them minor pain
that subsides within seconds. It's something you shouldn't do, but it's not
_violent_. Talking about it in an abstract sense is not something that is
particularly shameful.

Using this action as a literary device is not offensive. Saying "I want to
smack someone" acts to convey a desire to show someone that their actions are
wrong, like a parent reprimanding a child for finger-painting all over the
walls.

Honestly, in this situation, I find it appropriate. "I think using the suffix
-gate to describe a scandal is silly" doesn't have the same emotional and
visceral effect as "I want to smack these guys", even though the OP probably
means the former.

Writing is about conveying emotion just as much as conveying literal facts and
desires.

~~~
xenophanes
Are you genuinely unaware that many people think smacking children for finger
painting is disgusting, immoral violence? And that it should be a crime.

And that the excuse "smacking children is educational" is false.

~~~
jrockway
I never suggested hitting a child. I said the expression "I want to smack..."
conveys an emotion like a parent reprimanding a child. The emotion is one of
"talking down", not one of hitting someone, even though that's what a literal
reading means.

What I hate about HN is that very few people here seem to be able to
understand that the written word can be interpreted in many ways. What the
words literally mean is not what the combination of those words means.

 _And that the excuse "hitting children is educational" is false._

But actually, I assume you're just trolling. I know because you are
"anticipating" future arguments that have absolutely nothing to do with the
comment thread. The OP used a figure of speech. I mentioned parents and kids.
Now you want to have a debate on parenting philosophy?

What for? To waste my time?

Well, it worked, but now you have several fewer karma points and I have
several more.

~~~
xenophanes
If you don't want a debate on parenting philosophy, then don't advocate doing
cruel things to children. You brought it up but now you deem it off topic?

As to educational, if you do not consider hitting or punishing children
educational, then I'm curious: what is your justification?

~~~
jrockway
Look: I didn't say parents should hit their kids. I didn't say parents
shouldn't hit their kids. Nowhere in anything I've said in this thread, did I
bring this subject up. I have no opinion on this matter and don't care to
discuss it.

Please find some other comment thread to reply to.

------
fname
haters gonna hate, players gonna play and the FBI is gonna investigate

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bretthellman
They don't have a choice - it's their job... So what do you think, will the
FBI investigation play out to be good or bad for us entrepreneurs?

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natch
If you are a VC who was at those meetings, and you are on your blog loudly
claiming nothing illegal was going down, I guess you'll be directly answering
all the FBI's questions instead of letting a lawyer do the talking for you,
right?

I didn't think so.

The bad thing is, even if the conversations were innocent, the FBI does not
let go easily. Things start nice... "just want to make sure we clear up any
misunderstandings..." and then there are wiretaps, and more fun. Good luck.

------
alexguo
Evidence for many (maybe most) cases is gathered at the interrogation stage.
The larger the group the likelier it is that an investigation involving
talking to the people there will uncover everything.

www.homadynamic.com

------
danielnicollet
Weather or not the investigation will succeed, it will change significantly
how reckless angels and VCs have been when it comes to back-room deals and
silent partnerships. Time for transparency and thinking before speaking.

------
davidmurphy
Good.

