Tag Archive for 'fraud'

Finally proper sanctions for identity theft

Alberto Gonzales has been sentenced for 20 years in the slammer for stealing credit and debit card information from an unsecured wireless network of T.J. Maxx and then pilfering the accounts for millions of dollars at ATMs around the country.

Hopefully this is a first of many hard sentences against credit card scammers.

-TPP

The Business History of Gizmondo

How does a company go from producing a music magazine for churches to publishing a “greatest hits” compilation album to making area rugs and hardwood floors to manufacturing automotive GPS devices to manufacturing a portable video gaming system?

Read all about Gizmondo’s business history and you’ll find out.

With all the red flags in Gizmondo’s history it’s amazing investors kept on giving them money. Apparently the investors didn’t believe in due diligence.

-TPP

The Gizmondo story

Wired has an excellent article about the rise and fall of Stefan Eriksson, a one-time organized crime boss in Uppsala, Sweden.

Mr. Eriksson was first convicted of a crime when he was 19. He tried robbing an armored van. He continued progressing on his criminal career until 1993 when he was sentenced to 10 years in prison for fraud and trying to spread counterfeit currency in Sweden. He got out at 2000 and disappeared for a year or two.

He joined Gizmondo, a manufacturer of a portable video gaming device, with some of his fellow criminals soon after his release from prison. His compensation in this startup that had no revenue was almost $3M in 2004. Interesting way to run a startup. Not surprisingly Gizmondo filed for bankruptcy soon after it became apparent their portable gaming device would never be able to compete with the Nintendo DS and Sony Playstation Portable. The creditors’ accounting people are now wondering how did this company manage to spend nearly $400M USD in three years while generating little or no revenue. One can only assume the several luxury cars and over-the-top compensation of the company directors has something to do with it.

The downfall of Mr. Eriksson begun when he crashed his (stolen) Enzo Ferrari in Malibu last February. The police thinks he was driving the Enzo at more than 160mph at the time of the crash. Some estimates even say the speed of the vehicle might’ve been as high as 190mph. Mr. Eriksson first tried lying about who was driving the vehicle. He told the police at the accident scene a man named Dietrich had been driving and he had fled to the surrounding hills. Too bad the driver’s side airbag in the car had Mr. Eriksson’s blood on it. That’s not the only thing his blood revealed…his blood alcohol level was .09. The legal limit in California is .08.

That would’ve made the accident pretty routine, although expensive and high speed, DUI, but that’s not all that happened on that highway. Soon after the accident two vehicles stopped and two people stepped out. They flashed some official looking badges and identified themselves to the police as DHS officials and demanded they speak with Mr. Eriksson immediately. The following morning, a motorist who had stopped to help found out that a revolver had found itself under the front seat of his car. Apparently Mr. Eriksson’s associate who had come to the accident scene had dumped the gun under the seat while borrowing his cellphone.

The police investigation that followed soon found out that most of the Eriksson’s associates, incl. the two “DHS officials” were members of a police force for a local bus company, which owned not a fleet of buses, but one bus. Everyone was puzzled as to why a bus company operating a single bus would need a police force. It turns out Mr. Eriksson had made a business arrangement with the owner of the bus company. In exchange of installing free security equipment in the bus company’s premises, the owner of the bus company agreed to hire Mr. Eriksson and his former crime buddies as his police force. California state law allows bus companies to operate their own security forces and gives them some of the same powers than regular police forces have. Specifically it is easier for the members of such security forces to acquire guns, which is apparently why Mr. Eriksson and his buddies were attracted to the idea of becoming police officers. Several guns were confiscated from his and his associates’ homes. Some of the people involved are now charged with impersonating police officers.

As if that wasn’t quite enough, it turns out the Enzo Mr. Eriksson crashed wasn’t owned by him, but a bank in United Kingdom, which leased it to him. Mr. Eriksson had smuggled the Enzo, along with a second Enzo and a McLaren SLR, to United States when he moved there. His leasing agreement prohibited that, and additionally he had stopped making car payments, so all cars techincally belonged to the banks. One of the cars was, in fact, had already been reported as stolen by the bank financing it.

As a result Mr. Eriksson is now looking at seven felony and two misdemeanor charges.

Fascinating story of high life, crime and video games.

-TPP




css.php