The Fine Line Between A Venture Capitalist And A Con Man?
Date : 09 03 2008 Category : Business
Techdirt
One of the things you learn about Silicon Valley after you've been here for just a little while is that there are some folks around here who are really, really into the technology and innovation aspect of things -- and then there are those who are only around for the money. Sometimes it's not as easy to tell the two apart as you would think, and that's opened up tremendous opportunities for con men. I recently read the novel Con Ed by Matthew Klein, which shows what a fine line there is, at times, between a startup and a confidence scam in Silicon Valley. While it's a bit extreme, if you've worked at a startup in the Valley you'll probably recognize many of the characters in the book. Klein certainly knows about his stuff on the Silicon Valley startup side -- a decade ago he ran his own Silicon Valley startup that employed me, among other folks. While I can highly recommend Con Ed to anyone who enjoys a good con book, you don't even have to dip into the fiction pages to keep up on the latest cons of Silicon Valley.
The latest true story appears to be about a "venture capitalist," Moses Joseph, who convinced a bunch of big institutional investors to give him money for his fund... and then used it for a bunch of personal stuff, while lying and forging documents to explain to the investors what he had done with the money. This isn't the first time we've seen such "fake" venture capitalists either. A few years ago, there were a few stories of "fake VCs" that were incredibly successful in separating money from investors who believed they were investing in the next hot thing.
Of course, the guy is claiming that he wasn't a con man at all, but just a real VC who got in over his head. My favorite rationalization, though, is from his lawyer, who claims that it's not like Joseph "took money from little old ladies. He didn't. It was from big institutional investors." As if that makes it okay?
The problem with these stories, unfortunately, is that they make people skeptical of the real VCs and real entrepreneurs who aren't scamming. It would be nice if these stories were confined to fictional accounts, but it seems like that's not going to happen any time soon.
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The latest true story appears to be about a "venture capitalist," Moses Joseph, who convinced a bunch of big institutional investors to give him money for his fund... and then used it for a bunch of personal stuff, while lying and forging documents to explain to the investors what he had done with the money. This isn't the first time we've seen such "fake" venture capitalists either. A few years ago, there were a few stories of "fake VCs" that were incredibly successful in separating money from investors who believed they were investing in the next hot thing.
Of course, the guy is claiming that he wasn't a con man at all, but just a real VC who got in over his head. My favorite rationalization, though, is from his lawyer, who claims that it's not like Joseph "took money from little old ladies. He didn't. It was from big institutional investors." As if that makes it okay?
The problem with these stories, unfortunately, is that they make people skeptical of the real VCs and real entrepreneurs who aren't scamming. It would be nice if these stories were confined to fictional accounts, but it seems like that's not going to happen any time soon.
Permalink | Comments | Email This Story