
UsingMiles Founder Arrested - seto28
http://www.dailycamera.com/boulder-county-news/ci_18203847
======
kristapaul
Unfortunately, our company is one of many victims that have been identified
through an investigation into money raising activities made on behalf of Mr.
Austin Veith. Victims include a few investors in UsedTunes (also known as
uMedia), Jon Nordmark who is UsingMiles CEO, Wambo Commerce, and a number of
other individuals who have invested in Austin or his companies in the last 5
years. Mr. Veith has no current association with TravelFli / UsingMiles.com,
not as an employee nor a shareholder.

The situation has no effect on UsingMiles.com day-to-day operations, and our
passionate founder and employees are 100% focused on building a wonderful new
world-class travel service! In fact, UsingMiles.com is the ONLY frequent flyer
travel tool that was just named one of Entrepreneur Magazine’s “100 Brilliant
Companies.” We are honored to accept this accolade.

<http://www.entrepreneur.com/article/219660>

Moving forward, we intend to fully cooperate with the law enforcement and hope
that the innocent people involved in this situation can find justice. We thank
you for supporting us through this process.

~~~
abcd_f
Wow. This reads like a press release. At the very least it was copy-pasted
either here or at [1].

[1] [http://milepoint.com/forums/threads/usingmiles-travelfli-
fou...](http://milepoint.com/forums/threads/usingmiles-travelfli-founder-
charged-with-scamming-investors-out-of-450k.12209/)

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lkrubner
I've had the misfortune of working for someone in New York City who was
running a similar operation. But I think he stays just inside the law. He
announces that he has a seed fund for startups. He spends all of his days
pitching investors. He then pitches his ideas, usually working in concert with
one or more partners. He then hires 2 or 3 programmers to work on the idea. He
pays himself very generously for his leadership skills. For one of his
projects, he might raise $100,000 in 3 months and then pocket $20,000 as his
fee for providing leadership. The rest goes to the programmers. And he might
have 3 or 4 such projects going at the same time.

Technically, this is not a scam. He raises money and spends most of it trying
to build startups. But I did have the sense that his focus was very different
than what I expect of most of the Hacker News crowd. I had the sense that he
didn't really give a damn whether any of his projects succeeded. He was making
a very good living just raking in dollars from investors. And of course, if
the investors are dumb enough to give money to him, then in some sense they
deserve what they get.

I recall that for all of the many meetings we had, he never mentioned
customers a single time. He only talked about investors. He talked a lot about
"the deck" (the PowerPoint presentation he would use to dazzle potential
investors), which he constantly tweaked and polished. His only interest in the
programming was to show some progress so that he could ask for more money. And
then after a few months he would claim that the idea had failed to show
traction, and he would move on to the next idea.

Any boom will attract a certain number of parasites. I had the impression that
he was manipulating the rhetoric about a tech boom in New York City to sell
the idea that investors needed to get in on the action, via him.

It was intriguing to realize that this was even a possibility. For me, when
I'm part of a startup, I'm generally willing to sacrifice some of my current
income for the sake of seeing the startup maybe succeed. But this guy was
playing the opposite game.

He was very smart. And he invested enough of the money raised that no one
could accuse him of running a scam. And yet, I had the impression he was just
barely legal -- just barely doing the minimum so that no one could accuse him
of running a scam.

He did have one success in his past, which I think made his whole operation
possible. He was sort of like the aging actor who had a popular show 20 years
ago and nowadays does infomercials. That one hit gave him the credibility to
run his almost-scam.

Anyone involved in the startup world should be aware of operators like this.

~~~
patrickgzill
If he was staying under $200K per investment/company, it might be for legal
reasons.

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ck2
So in comparison, if law enforcement has an "economic crimes unit" and can
"follow the money" and get to the bottom of this, why hasn't anyone in the
financial industry/wallstreet been arrested/prosecuted for the financial
collapse?

~~~
zedshaw
Because Wall Street runs the government. Haven't you been paying attention?

~~~
nomurrcy
Exactly.

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seto28
I submitted this with a "TechStars Boulder 2008" part added to the title, why
was it removed? I see "YC" references to companies in titles all the time so
isn't that relevant info?

~~~
pg
The reason companies funded by YC are often called out as such is that this
site is run by YC. But almost all startups have multiple investors, so it
would get pretty unwieldy if they were all named every time a startup was
mentioned. There's no reason to do it unless the story involves the investor,
which is not the case here.

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acangiano
I hate to see investors' money wasted on "hookers and blow", when there are so
many startups out there which could really use the money to grow their
legitimate operations.

~~~
minikomi
"It's like facebook... but with hookers and blow! You know.. Social."

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alain94040
Sad story. Bad apples are everywhere, and when you work with a hundred
entrepreneurs, 99% are genuine, and then you get the con artist. It's so hard
to spot at first.

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mcargian
Will this effect usingmiles.com recent $2.7 million round of funding?
[http://techcrunch.com/2011/04/06/usingmiles-
raises-2-7-milli...](http://techcrunch.com/2011/04/06/usingmiles-
raises-2-7-million-for-rewards-management-platform/)

~~~
mkramlich
I'd guess that Nordmark taking over the CEO role from Veith was (1) prob a
condition or recommendation of the newest round of investors (because Nordmark
is more experienced and has the success of eBags under his belt), and (2) the
event that enabled Nordmark to gain much more power and transparency over the
books, which in turn was the final straw leading to the charges against Veith.
This is just speculation based on the publically reported info we've seen,
however, and I obviously could be wrong. Since Nordmark is clean and has
succesful track record and UM got all the extra cash in April, that all seems
to be a net positive for the company. I think the fundamental service
delivered by UM is a good one, and unlocking the value in otherwise unused
frequent flyer miles is especially helpful to travellers in a recession. Veith
is also innocent until and unless courts find otherwise. And I think the
TechStars folks are good at picking talent combined with promising venture
ideas.

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callmeed
Considering he has somewhat of a history, is this a lesson in vetting for
angel investors and accelerator programs?

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vaksel
what do you need a $10K apartment in NYC for? That's pretty much penthouse
territory.

I mean I can see if you are already making millions...but if you are just a
startup that should be a big red flag to investors.

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ballard
Legitimacy and a smile (or lack thereof) are all that matter.

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earl
Bummer.

Someone -- I think a startup founder I know and that people have heard of, but
I could be wrong -- related to me that when he got a series A or B, the
background check was so thorough that the investors noticed he'd accidentally
let his drivers license lapse and had an unpaid parking ticket.

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babel17
I love this part of the article: "In 2010, Nordmark paid $25,000 for a patent
on a new online digital used music and book website that Veith was pitching,
dubbed UsedTunes.com. The site exists but isn't operational."

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thinkcomp
This is further proof that raising money does not make one inherently more
trustworthy. Unfortunately, on July 1, California law will reflect that very
notion.

[http://www.quora.com/Aaron-Greenspan/In-Thirty-Days-
Payments...](http://www.quora.com/Aaron-Greenspan/In-Thirty-Days-Payments-
Innovation-Will-Stop-In-Silicon-Valley)

