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The Almighty Buck

The Great Internet Con 201

Imagine a preacher-turned-conman starting a company that claims to have developed a new, high-compression method of delivering full-screen video over the Internet. Imagine mandatory 36 hour shifts and prayer meetings. Imagine investors pouring millions of dollars into this venture, and high-profile executives joining the company in hopes of getting rich when it goes public. This is an astounding story, told in great depth by The Standard. Pixelon, the company in the article, has been mentioned in Slashdot once before: when they sponsored The Who's live reunion concert and webcast last October.
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The Great Internet Con

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  • If you read even the first page you will find out Fenne wasn't a preacher. But who needs editorial control anyway?
  • With respect, bullshit. If they sent in a video person, that person a) would only be able to report on what he saw and b) would have the hashed up Microsoft technology presented to him as a "neat hack" which they were using as a development platform to create their new technology. Or something. The point is that a good conman can make night seem like day, and "tech people" have no magical insight which renders them immune to a snow job. Remember cold fusion? Remember Xanadu? Remember Heaven's Gate? It certainly seems as if there was a core of digital video technology in this company, which, with good presentation, could have been built up into something which would have got through this mystical "tech person"'s screens. Or are you claiming that tech people aren't prepared to give the benefit of the doubt to things that don't currently work, but seem like they might? In which case, you have to account for the popularity of Berlin and HURD.

    In any case, it wouldn't take a "video person" to see that this company was a crock; any basic credit check on the founder would have done. If you'd sent in a video person who was as dilligent and intelligent as the investment bankers who did dude diligence on the company, he'd have fucked it up just as badly.

  • Certain expenses are fixed. Therefore, should volume inncrease, the cost of fixed expenses will be spread across more transactions.
  • The bandwidth of amateur radio frequencies is a lot more limited than available online storage space.

    Why don't you implement a search engine where you have to pass an internet competancy test in order to index your page?

    BTW, do driving licenses do anything to prevent unsafe driving, driving while talking on cell phone, DUI etc? No! there are plenty of unqualified drivers out there because licensing doesn't do shit.

    Regulation sucks. remember that.
  • by Anonymous Coward
    My first big web job was building a site for a pyramid scheme company......and it took us MONTHS to finally get paid.

    Thats the nature of pyramid schemes. The person at the top often gets a decent return, but it takes time. Maybe you should have given him and 5 other people a dollar each and then sent your names to 5 people......... or just turned the guy in.
  • Are you too dim to understand the difference between Glosasalia (ecstatic tongues as I referred to in my post) and the ability to speak in an unknown foreign language through apparently supernatural means?

    It is apparent that you have acquired all your "knowledge" of the subject from Snow Crash.

    As for Western Christianity -- that's a common designation. It doesn't mean Catholicism. go do some research.

    --

  • Unambiguously? Can you not understand the distintion (which the Greek leaves unclear) between "my followers will have the ability to do these things, and some will do them" and "all my followers will do these things"?

    --

  • Well, there is religion, and there are beliefs, and the two are separate and distinct. Many different religions (and sects within them) preach similar beliefs, and you will find extremely varied beliefs even within a single church/synagogue/mosque/whatever at times. I used to wince at the thought of this distinction. Now, with fundamentalists kicking pretty much everyone who disagrees with them even slightly out of churches across the USA, including my family, I embrace it.
  • Well, there is religion, and there are beliefs, and the two are separate and distinct. Many different religions (and sects within them) preach similar beliefs, and you will find extremely varied beliefs even within a single church/synagogue/mosque/whatever at times.

    I used to wince at the thought of this distinction. Now, with fundamentalists kicking pretty much everyone who disagrees with them even slightly out of churches across the USA, including my family, I embrace it.
  • Your rant smacks of elitism, and your arrogance demonstrates a rather myopic view what the internet can be used for. This sort of intellectual chest thumping is full of massive generalizations, and as such, your opinions strike me as shallow. Your comments about US politics strike me as a knee-jerk reaction of an underinformed idealist, rather than having any sort of insight or worthwhile commentary.

    As a general principle, the content of the internet should in no way be filtered, and the same goes for the users. The uninitiated user, who may get their service from AOL, has just as much of a right to be using the internet as you, no matter what their intent is.
  • the interesting thing about this con is how irresponsible the VC's were. They saw an opportunity to fleece some virginian rube, and they wanted to move so fast that they didn't perform the most basic due dilligence on either the technology or the management team. As near as I can tell, the VC's (and I guess the people that invested in them) were the only ones who got hurt.

    I think the VC's got what they deserved, and I feel far worse for the victims of Stanley's original investment con.
  • The company was promising to make the Internet just like TV.

    I'llnever understand that mindset, I mean, we already have TV. When I was a kid we had 3 channels and there was nothing on (god forbid the president farted, all 3 channels would break in with a news flash). Today I have 500 channels of satellite, and guess what? There's still nothing on!
  • In fact, I think the way foward here is for the Internet to be restricted to those who have the brains to pass a test on basic technical skills (such as what is UDP or what port does HTTP use) and general net etiqutte. At least this way we'd only get people who would use the net for something good and maybe the corporate dominance of the net would be stymied.

    Normally I don't like to descend to the ad hominim level, but I can't reconcile what's written above with any conception I have of a rational, thoughtful person. The best my liberal-squishy side can do -- and I assure you, it's splendid at rationalizing unfathomable behaviors -- is to reason that perhaps your faculties have been shredded by years of untreated syphillis infection.

    So I'll just cut to the chase here and call you a pinheaded idiot. Anyone who'd take the greatest communications environment ever known to mankind and restrict it to propellerheads who know a socket from a hole in their vacuum cleaner cannot possibly be a thinking human being; such thought is generally confined to subhumans like marketing executives and Senators.

    By way of direct refutation, I offer this: my mom, who has instructed beer-free courses in gardening over the net from a remote little town in Ontario for two years now, falls firmly into the port-challenged group. And I suspect that by any objective standard she's contributing far more to the Net as a whole than you are, with your asinine bleatings on Slashdot.

  • The best part is, the crashing would be so reliable. It's the one thing we can consistently count on from Micro$haft.
  • Great example of the magic demanded from the
    computer industry! Out of curiosity, when did this
    professor make his statement? I'm interested in
    how long the astute have been able to pinpoint
    the problems this accurately, and not manage to
    get anything done about it.

  • This won't work at all. The composite numbers representing the messages (actually Goedel numbers) will be much longer than the original message. Then, the harder you look for a prime with a short factorisation, the larger and longer the offset will be. This might work as a compression mechanism, but I really don't believe it's likely to achieve the 10000:1 compression you think.
  • Do the math, Stanley. Let's assume the lowest acceptable resolution for a TV frame: 320*240 at 16 bits per pixel. That's 150K bytes per frame, and there's 30 frames per second. But let's be generous and drop it to 15 frames per second. That leaves us with 2.25 megabytes per second.

    And you're telling me you can compress this down to 5.6K bytes (minus IP protocol overhead). While there's plenty of room for improvement in image compression technologies, no one with a brain in their head is talking about compression ratios of more than 50:1 without massive image quality loss. Yet you're claiming this con man would have achieved a near-lossless compression ratio of 400:1.

    You, and your former employer, are full of sh*t, dude.

    Schwab

  • Therefore, the (metaphorical) signal-to-noise ratio of amateur radio is far greater than that of the internet.

    Have you listened to the geezers and nuts on the 80 meter band?

  • Make that "a number with a short factorisation", not "a prime...". Like duh!
  • There is a simple and well-known algorithm for compression of any amount of data into a single bit. The bits are added togeteher, repeatedly, until a single bit remains. There is an obvious shortcut, as all possible data combinations, save all 0's, map to 1.

    The catch is that there's no known way to decompress (except in the special case of 0 with a known data size :)

  • >>I think your elitist vision of a net only accessible to the privileged educated few would be quite horrible

    Why? Because we can have quality websites filled with stuff that we can appreciate?


    Who judges? You? You may not give a rat's ass about Granny Lunkert's county-fair-winning rhubarb pie recipe and photos of "skeeter23"'s huntin' dawg, but their friends and family do. That's the point. The internet isn't just for the 'Technological Elite', it's for everybody, like it or not. That's called "democracy".

    --Riff

  • It's not surprising at all that this story is getting legs - after all, the news has been awash in stories of internet zillionairres and transformed industries for years now. It's only fitting that a cautionary tale of reckless avarice leading to ruin gets some run as well. The biggest fools in all of this were the VC bunch, who discarded every common-sense investing rule in their rush to profit from the IPO. Like the article mentioned, even a cursory background check of this guy (which a secretary could have performed in a day) would have sent up red flags.
  • A tax deduction means that you don't pay tax *on that money*, not that you save that ammount.

    If you lose $1M and get to deduct it, it saves you taxrate * $1M, not $1M. Even at those silly canadian tax rates, you're *much* better off with the money than with the deduction.

    On the othe rhand a tax *credit* is dollar for dollar: a $1 tax credit reduces your taxes by $1, and is essentially the government paying it. However, most tax credits are at less than 100% (but we have some popular 100% ones in the US for the middle and lower classes).

    hawk
  • The Internet does *not* need to become more like amateur radio. If you spend any time with hams, you quickly find out that the spend most of their time arguing about whether they should still require Morse code as a requirement for getting a license. The divisions within the ham radio community are killing the hobby. The average age of operators is getting older and older and very few new people want to get into something that is seen as a pastime for cranky old men. All this because of an argument over a technology that has been largely obsolete for half a century!

    An Internet Driver's License is an inherently bad idea. Yes, there are lots of personal pages out there that have little relevence outside a small group of friends and relatives, but that it kind of the point. The Internet provides one to many communication without regard to distance. Many of us here belong to communities of interest outside the mainstream and use the web to keep in touch with others in these communities. Slashdot itself is an excellent example of this.

    One of the idealistic promises of opening up the Internet was that it would allow direct communication with people in countries where contact with the outside is discouraged. How many Internet licenses do you think would be issued in places like Myanmar or China or North Korea? Do you think that people in these countries should be categorically denied access to information freedom to spare you the inconvenience of getting the occasional personal page in your Google results?

    As the Internet continues to grow over the next several years, we will see more self-defined content rating anyhow. I would be perfectly happy to include an XML tag that says something like:

    category=personal
    commerce=no
    bandwidth-priority=low

    into my personal page. People who want to see pictures of my dog will go there when they want and I don't really care if no one else ever sees it. This would also allow me to set my viewing filter to something like:

    subject-matter="TRS-80"

    and I could be back to the mid 70s before most Slashdotters were born and there was a lot less congestion on the Internet!
  • Thank God I live in Europe, where the kind of rampant capitalism the US practices is tempered with a more humane socialist brand of politics.

    Thank God I live on the Internet, which is big enough to accomodate pictures-of-people-and-pets-loving hoi polloi like me and arrogant socialist sneering assholes like you.

  • This man was merely providing a service, standardizing internet video into a single application, taking people's money and making a run for it. This action will ruin the tech industry, bring down the stock market and the commies will take over. He's being punished for being too successful and his freedom to innovate is being restricted.
    Or something like that.......
  • How is this comment a +4 - Insightful?

    He makes sweeping generalizations (e.g. no one who started on AOL has ever switched to a different provider, ever, much less learned anything about the 'net, technology, personal computers, etc.; and the comment about the unwashed masses being "minimally educated, apathetic peasents [sic]"), uses straw men (e.g. the responder suggests that an elitist 'net that doesn't allow certains kinds of sites and, effectively, censors content, would be worse than wading through inane sites that pander to the masses--this gets re-interpreted by Mr. Erikson as "what do you have against informative and non-corporate controlled web sites?", which is not at all what the criticism was about), and basically adds no new information, or even an original perspective on the situation.

    It's the same old argument that's been repeated over and over throughout history: the masses don't know enough to decide for themselves what is best for them, and we should [a) decide for them or b) let them wallow in their own ignorance while we pursue the more refined arts, in a glorious intellectual paradise where no outsiders can sully our crytalline thoughts and ideas].

  • It is clear to me, that non of you read the article, or at least failed to read it with an open mind. There was no internet con here. This is a story of a con man, on the run from the law, who created a legitimate software company, who overbilled their product (Microsoft does this all the time), and made some major marketing blunders,and had his company stolen from under him by his board of directers, which then collapsed without him. Nobody was cheated, the company is still estimated to be worth 25 million dollars, only slightly less than the actual investments, which is a whole lot better than most internet companies. All marketing is in reality a con, you emphasis the good and ingnore the bad. This man is doing time for his previous crimes, not for anything in connection with his software business.
  • Are you too dim to understand the difference between Glosasalia (ecstatic tongues as I referred to in my post) and the ability to speak in an unknown foreign language through apparently supernatural means?

    Are you so dense you cannot learn to spell glossolalia right, even though it was already spelled out for you in my previous post? And why the bogus capitalization, we're not writing German here.
    Now, looking over the fact that you can't even spell right the name of a linguistic (or rather, psychological) phenomenon that you purport to know, I feel obliged to remind you that the second phenomenon you referred to (known as xenoglossia) was never observed to be genuine, except under externally induced hypgnosis. But perhaps you have some references to counter that, right?

    It is apparent that you have acquired all your "knowledge" of the subject from Snow Crash.

    It is evident that you acquired all your knowledge of the subject from Snow White.

    As for Western Christianity -- that's a common designation. It doesn't mean Catholicism. go do some research.

    Where is that 'common', Joe? What then, in Heaven's name, do you mean by it, if not the opposition between Western rites (Roman) and Eastern rites (Orthodox)? Do I really have to make you aware of the fact that Pentecostal Protestantism (what you probably think of when you say Christian) is not prevalent anywhere else but in the good ole' USofA? Do you think the 'West' (however you define it) is restricted to Uncle Sam? If so, then why not call it by its proper name, damn it?
    You go do some research, because not only you need a clue desperately, but you also seem to be the one who's still in high school.

  • There is a Russian saying "Fraud is a tax on the stupid".

  • That's not a bad thing. Maybe through the 'net they'll learn.

    LOL! These are the kind of minimally educated apathetic peasents which would never have got onto the net unless "visionaries" like Steve Jobs hadn't come up with a way of making connecting to the net as idiot-proof as possible. And now thanks to AOL we've got millions of them, and how many of them have changed? None, they're all still using AOL.

    I think your elitist vision of a net only accessible to the privileged educated few would be quite horrible

    Why? Because we can have quality websites filled with stuff that we can appreciate? Because rather than having to pander to corporate whims we can design the web to suit us? What about this fills you with such fear?


    ---
    Jon E. Erikson
  • once they reach into the millions.
    Heck, Royal Bank just admitted that some of its traders lied about stock values to manipulate peoples pension funds: Toront o Star [thestar.com]

    The rationale?
    `Everybody does it,'' said one industry veteran.
    Ah, so that makes it all better.

    Pope

    Freedom is Slavery! Ignorance is Strength! Monopolies offer Choice!
  • These people really have no-one to kick but themselves. Offcourse its an offence to swindle people like this but IMHO everyone with a bit of healthy common sense, and some knowledge about the going-ons on the Internet, won't fall for these tricks. Heck; this used to be lesson #1 when dealing with Internet related business(es). I remember an Internet convention in Holland some years ago called "Internet down to earth" where major companies gave lectures about the whole concept and various aspects of this, in that time, new technology. The topics varied but when profiling and such were concerned the basic rule was "don't let yourself be fooled". A company can create excellent and very impressive profiles (in that time it was totally focussed on websites) but basicly they don't have to mean anything. In short; a beautifull and very impressive website does not mean that the company behind it is also looking like that.

    And when I see articles like this, like I said many years later, you can clearly see the need for information like that. People can be easily tricked when "new technology" is concerned.

    But a question which I find more interesting is how situations like this can be put to a stop? The Internet is growing and accessing it becomes easier every week, figurly speaking offcourse. Which also means, to a certain extent, that people loose focus on how things really work. Which is essential when developments like this are concerned. I'm really interessted how those companies came to their decision to invest. Was it the cheap and slick speech of this gentlemen or did they really consult some experts on this subject?

    Basicly this just shows us that it is oh so important to know what you are talking about when technology like this is concerned. When people want you to give them some money to allow them to develop great things (tm) be vary carefull and make sure you know whats really going on.

  • As it so happens, I do know the original Greek, but both the translations you site are good ones -- I won't try to trump you with it.

    You seem to argue that that verse means that all Christians MUST drink poision, wrastle snakes, etc. Can you not follow how the phrase "these signs will accompany those who believe" allows for something other than a one-to-one relationship between Christians and snake handlers?

    Incidentally, that particular verse is questioned by a lot of people because the earliest manuscripts of Mark simply don't have it. It is possible that the (few) early manuscripts we have could well be wrong, and that these verses might be part of THE manuscript that Mark wrote. But honestly I doubt it.

    In any case: I am not an inerrantist. That is, while I will defend the reliability and usefulness of the Bible to the death, I feel no need to claim that "every word is the literal word of God". Literal inerrancy is a weak position because it ignores the fact that the step from language to meaning is a big one.

    --

  • You obviously didn't read the entire story.

    This was not JUST an 'internet scam'. The internet had nothing to do with the scamming itself. The internet only had to do with a technology the company claimed to have developed.

    It might as well have been a better rat trap, this guy could've probably sold that to investors too.
  • Why do we link to sites that have annoying pop-up?

    I followed the link to The Standard and was immediately greated with a pop-up, I closed that window to be greeted by another in it's place. I closed that window, and then I closed the new browser that I had opened for the link.

    F--- The Standard!

    Refrag
  • In fact, I think the way foward here is for the Internet to be restricted to those who have the brains to pass a test on basic technical skills (such as what is UDP or what port does HTTP use) and general net etiqutte.

    Are you thinking of the sort of test that you needed to retake about 48 times before successfully posting to slashdot? [slashdot.org]

    Thank God I live in Europe, where the kind of rampant capitalism the US practices is tempered with a more humane socialist brand of politics.

    The kind of humane socialist politics which lets the people do what they want unless it offends their betters?

  • This has got to be a joke. Visitors to SlashDot: this is not a typical SlashDot user and this should not be taken as an example of how people here think.

    I am quite happy that the average idiot can now create a web page with pictures of their dog. And I actually think I'm pretty good at computers but I have no idea what UDP is or what port HTTP uses.



  • When all the people looked at the Emperor's new clothes, all of them commented on how fine they looked, and not one of them would dare mention that the Emperor was naked....

    *closes storybook* oh. right.

    Internet like TV? like AOL/TW?

  • I find it interesting that these things have been going on for years, and it's only now that people are beginning to pay attention to them.

    In bull markets, people ignore the bad news and pay attention to the good news. In bear markets, people pay attention to the bad news, and ignore the good news.

    This is only the tip of the iceberg. There is much more to come.
  • If they sent in any video person, they would have seen right away the whole thing is a joke.

    They did send in a video guy. He invested before he even reported back to them.

    carlos

  • by NetFu ( 155538 ) on Tuesday June 27, 2000 @10:10AM (#973725) Homepage Journal
    No kidding, following this story I found a very funny/interesting site describing itself as "the dot-com deadpool" at FuckedCompany.com [fuckedcompany.com].

    They have literally almost 300 *recent* stories about various dot-coms and how they fucked up in some way either screwing over their customers, employees, etc. or all of the above. The antics include Hollywood Video execs emailing their subsidiary Reel.com's CEO to fire all or most of the employees and the CEO simply forwards the e-mail to all in the company, Kozmo.com requiring almost every employee to submit to a detailed background check (and 50+ employees quitting or being fired), & copies of bad customer service feedbacks to Kozmo.com [fuckedcompany.com].

    GEE, I'm glad I stayed with my solid "old economy", more traditional Silicon Valley electronics employer -- we've been among the fastest growing companies in the USA for several years (we're an ancient 9 years old), we're merging, acquiring, going IPO, making stock option money for employees and no B.S. even close to this stuff! I guess the dot-coms are finally realizing that even "new economy" companies need some kind of business-running know-how! It's a humbling time for all of us...
  • Dropping the religion and dropping the trappings of the religion are two different things. As contemptible as people like the Bakkers were, who dropped the religion but kept up the act, there are still folks like Billy Graham out there.

    --
  • This proves the point that it is morally wrong to allow suckers to keep their money.
  • Around 1990, a friend of mine got excited about someone he'd met in San Diego who was developing a great new technology to tranfer movies over the phone line. It was supposed to put a full movie in 15 minutes at the same quality as a vcr.

    I tried to explain about theoretical limits and the like to my friend (who was just short of brilliant), but he was convinced.

    A fem months (couple of years?) later, I read in the Las Vegas paper about the arrest of a con-man in San Diego, who had had a scheme to compress movies and . . .

    SO couldn't this guy have come up with something original, instead of somethign that had already sent someone to prison???

    hawk, esq., never ceasing to be amazed at the stupidty of criminals
  • I seem to recall the title as "The Gold at the Starbow's End" by Fredrick Pohl.
  • This is what happens when you get people excited over the prospect of some "new technology" that will "revolutionize the Internet". It is happening all over the place, and the Venture Capitalists are pouring money into things they don't, won't and can't understand. The stock market finally shook itself up, I expect the VC market to do the same, as investors become increasingly wary on where their money is going and what is is doing while it is there.

    Enigma
  • Nah, Tim Berners-Lee is a Brit.

    You're right about HTTP - developed at CERN, Switzerland, wasn't it?

  • ... make Stanley an
    iCon
    ?
  • by ChrisGB ( 114774 ) on Tuesday June 27, 2000 @03:20AM (#973733)
    Does anyone else find it amusing that stories of con artists that would ordinarily not be newsworthy, are treated differently because they are 'on the web'? As far as I can tell, this guy is just another conman who managed to sucker people into buying into his scheme and then running off with the money.

    Any time there are gullible people looking to make fast money there will be people like this - the Internet hasn't changed that - it's just another area to exploit.
  • My first big web job was building a site for a pyramid scheme company... ...I felt slimy writing code for that man. (Shudder)

    You should feel slimy if you chose not to walk away from a job like that.

    All of us should make life difficult for pyramid schemers at every opportunity. I've seen lives ruined because of bastards like this. Sure, they were more naive than you or I like to think we are, but that doesn't make it okay for somebody to bankrupt them.

    The case has even been made (in P.J. O'Rourke's book "Eat the Rich") that the entire economy of Albania collapsed mainly because of pyramid schemes. Remember the war in Kosovo? Might not have happened if it wasn't for those punk-ass ex-KGB mofia mother f*$%@!#% ripping off everybody's last dime.

    I strongly urge everybody to be an obstacle to every con like this that has the misfortune of stubling by you. Rip-off schemes make it harder to do legitimate business, which hurts all of us.

  • by kootch ( 81702 ) on Tuesday June 27, 2000 @03:21AM (#973735) Homepage
    think about it, this guy got everything he ever wanted probably:

    a respectable job at a startup
    being the spiritual leader in a high pressure situation
    hell, he got the WHO to give a reunion concert

    and the only thing that was actually lost were sucker VC's money. Well, it serves the VC's wrong for not doing their homework. And I bet his employees were well compensated.

    Well, it's not what the internet commerce business was built for, but I think the majority of the people here prospered.
  • No kidding. How can you take anybody with that haircut seriously enough to give them money? He looks like the guitar player from Hall and Oates, or some goddamned Firebird-driving Mecklenberg used car salesman. Never trust a man with a perm and a skinny necktie. If he has a moustache to go with, don't let him near the high school, either.

    --
  • Q: Who has worked for someone like this before?

    A: Apple and NeXT employees. Also, Microsoft employees. And don't forget Oracle employees. Oh yeah, while I'm at it, Sun employees.

    Steve, Bill, Larry, and Scott each have wild passions that require complete submission to fulfill. Steve and Bill have succeeded well to this point (in their employees eyes, and some of America's). Larry's coming along, although he and Scott are both fanatical about ending Bill's regime.

    In other words, this situation is atypical because noone truly looked into his background. The four mentioned above were around before backgrounds existed at least in their arena.

  • What was the video quality like?
  • by Anonymous Coward
    There are more out there than you think. There is a firm marketing vehicle tracking devices. http:\\www.avlinfosys.com The primary focus of the company is to raise VC for the next version of the product. Smaller, Faster, Better. No one ever questions the fact that the current product doesn't work.

    " well, yea, we have some bugs with version 1.0 but those have been addressed with the new release, so were focusing our attention on the new product."

    The company has been in business for over eight years, never produced a product past the beta stage & never made a profit. The sad thing is that there is never a shortage of stooges to step up and throw away their money.

  • Yeah, but it touches on a common slashdot theme -- the mad rush of daytraders and VC's investing in worthless tech companies and dot-coms that will never turn a profit, such as Amazon.com and slashdot.org (*ahem*). Also, this is not just-another-con-man... Most conmen (and criminals in general) are poor people who barely scrape by through stealing and don't have that much of an impact on their victims, or impact very many victims. This guy wasn't exactly a master criminal but he certainly stands out among the crowd. And so does his story.
  • by thesparkle ( 174382 ) on Tuesday June 27, 2000 @04:09AM (#973741) Homepage
    I read that early this morning (about 4AM). Look at that guy. Pretty scary, especially that closeup photo. What a loon.

    I think I would have been tipped off when he started dropping names like the CIA, the Saudi Royal family and whatnot. "Hi there, I live in my Hyundai, but I used to work for the CIA and now I have developed a new product and I would love to get you on the ground floor.." Bzzzt! Nut Alarm!

    Who has worked for someone like this before? You know, the cult leader type who makes proclaimations, expects undying devotion from his staff, regularly promotes and fires arbitrarily and so on? I worked for someone like this for awhile. He used to get depressed and sulk whenever he suspected people did not like or trust him. Then he would suddenly get happy and start screwing people over; cutting back their salary, reading their email, finding reasons to fire people, etc.

    I don't think it has anything to do with "The New Economy" or "The Internet" but rather the timeless wisdom of P.T. Barnum. Pretty good research by The Standard, I wish all news articles were that good.

    Also, I don't think he did anything wrong. All he did, both in Tennesee and California, is take advantage of people's insatiable greed and their suceptibility for quick buck schemes. He should get paid for teaching people how to avoid conmen.

  • I have to agree. I don't think this is any worse than the latest ploys by MCI, AT&T, etc. for getting people to change their phone companies.

    They send a check addressed to you. No paperwork included. On the check it has a disclaimer in small writing that says cashing this check amounts to giving AT&T the permission to switch your long-distance phone service.

    I think that's more of an illegal scam than this one...

    but my question about this scam is, where were all the technology guys that developed this supposed compression technology? Isn't it kind of weird if there weren't any?
  • The internet is a mass medium, and as such, will be the playground of con-artists, in the same way that con-artists have played in all the mediums of the past. That's an undisputed fact. It's especially vulnerable right now because there are many people that do not understand nor see the bigger picture. Society should try to prevent this stuff from happening, but at the same time, it's always 'caveat emptor'.

    This is just a more obvious con. You need to look below the surface for the surreptitous con's that happen every day, yet are rarely questioned. Consider a lot of brand marketing and corporate activities that play upon individuals need to believe and belong, or other emotional issues. They play on people's confidence in another way. I could draw examples from corporate product marketing preying on teenagers need for belonging.

  • He has no official Gubmint ID and wants to be paid out of the company expenses fund instead of drawing a salary, you know, like REAL employees!

    Pope

    Freedom is Slavery! Ignorance is Strength! Monopolies offer Choice!
  • Time to switch to decaf. UDP is uniform datagram protocol and HTTP uses port 80 by default although it doesn't have to, you can set it up how you like. The 'net is better because it's diverse and elitism only has a place in the British Foreign Office. As broadband increasingly becomes available (keep holding your breath) the bandwidth-wasters will become irrelevant. I agree with most of what you say about the Yanks though, although the UK doesn't have most of the nice laws that Scandinavia has.
  • by SurfsUp ( 11523 ) on Tuesday June 27, 2000 @04:12AM (#973746)
    On freshmeat yesterday, a GPL compressor for still and moving images that does Low Bit-Rate Image and Video Coding with Weighted Finite Automata [freshmeat.net], outperforming JPEG and is competitive with fractal and wavelet compression. Efficient enough to decode movies in software. I grabbed the code and checked out the demo images: it does seem to work.
    --
  • Not to slam religious people, but Stanley/Fenne/Whatshisface preyed upon quite a few older folks, country folks, naive investors.. people who felt a compulsion to believe.. usually in some larger benificence.

    Again, I'm not saying that the set of religious people equals the set of suckers -- I know far too many beings who are both intellectual and spiritual -- but would I be wrong in assuming that the latter is certainly a more viable subset for this kind of idiocy? Is there some tendency for those who need a Good Guy for codifying their morals, ethics, cosmology, etc. to also fall prey to a "gold-tounged salesman" .. who sells himself as a reasonable facsimile?

    There seems to be more than mere gullibility here; it's as if the main character of this sordid little adventure targetted people who would not only believe, but who had an inner desire or need to believe.

    Asbestos suit activated,
    -----
    "O Lord, grant me the courage to change the things I can,
    the serenity to accept those I cannot, and a big pile of money."

  • by FreeUser ( 11483 ) on Tuesday June 27, 2000 @07:21AM (#973755)
    and the only thing that was actually lost were sucker VC's money. Well, it serves the VC's wrong for not doing their homework. And I bet his employees were well compensated.

    The employees may or may not have been well paid. I bet they were very underpaid their last couple of weeks (read: they probably didn't get their last paychecks). The stock options obviously didn't pan out either.

    Even if what you say were true, and everyone except the VC's (who got defrauded out of their investemnts) prospered, this is very short term prosperity indeed. Now the money has run out, the people are unemployed, and the VCs in question may well never invest in another internet startup again.

    This kind of thing makes it more difficult for legitimate small-time startups to get off the ground, and as a result leads to less, not more, prosperity.

    It isn't easy having much sympathy for wealthy VCs who throw their money around, particularly when we see really inane startups being so funded, but relishing their being defrauded is highly counterproductive IMHO. Far better to relish this priest finally getting sex the way he wants it for, the next twenty years, from his cell mate, forcefully, from behind.
  • by Ground0 ( 63349 ) on Tuesday June 27, 2000 @04:18AM (#973762)
    (Beginning rant now ...)
    When I was a wee young lad, a professor sighed and told me "The difference between computer science and other forms of engineering is that if someone wanted a bridge built over the Chicago River, for example, and one bid said the work could be done in 8 months and cost $100K and another bid said 1 month and cost $10K, the person would choose the first bid, because the first bid seems practical and reasonable while the second bid seems unrealistic. Now if that person wanted a computer project done, no matter how improbable the smaller bid was, the person would choose that bid!" Now, many years later, I have witnessed the truth to that story that people always want miracles out of programmers no matter what we know can be done.
    Until people learn that computers is a science and not magic, I think cons like this will continue. Perhaps some will be smaller (stretching the truth of how successful a start up will be) and not as large as this con, but they will continue until people learn.
    (...ending rant now)
  • Or you could just be working in Beverly Hills. (Please don't let there be any moderators from there reading this.)

    kwsNI
  • You know, that was the first thing that occurred to me, too. Except that maybe being a con-man is a step up from being a preacher.
  • Who has worked for someone like this before? You know, the cult leader type who makes proclaimations, expects undying devotion from his staff, regularly promotes and fires arbitrarily and so on?

    Yeah, I worked at Microsoft for a while . . .
    --
  • The VCs were stupid for forgetting the first law of business: Assume everyone is a lying bastard until they prove beyond a reasonable doubt otherwise.

    The employees were stupid for forgetting the first law of the job market: Keep your resume up to date.

    It's taken me a long time to get to the cynical point that I'm at now, but I no longer put any loyalty into my job (I'm only here for the paycheck) and I always assume salesmen are hiding something (the first question I ask them is, "So, how do you make your money?").
  • On the othe rhand a tax *credit* is dollar for dollar: a $1 tax credit reduces your taxes by $1, and is essentially the government paying it. However, most tax credits are at less than 100% (but we have some popular 100% ones in the US for the middle and lower classes).

    I'm not *quite* sure I know which ones you are talking about in that last sentence. The Earned Income Credit (EIC) is refundable, but I had thought that most others were not, in almost any bracket.

    And a non-refundable tax credit can only reduce your (income) tax bill to zero. Which might sound pretty good, except that many people pay more in payroll taxes than income taxes, and there ain't no saving throw against those except to avoid earning wages. And that method can be surprisingly lucrative...

    (And, yes, I know you know all of these things, unless I messed up and made an error here somewhere.)

  • which would mean it wouldn't create unique integers.

    Aleph-naught is the measure of infinity for the integers and rationals, while Aleph-1 is the measure for the reals. In general, 2^Aleph-n = Aleph n+1

    I *think* that in using all patterns for all pseudo-random number generators, you have 2^Aleph-0 possibilities, meaning that you cannot store the result in an integer (or any finite number of integers).

    But then, I don't use this math all that often (but we actually had to take such things into account in my dissertation while designing the algorithm [what do I mean, "we"??? I bounced things off of the committte members, but the designe is purely mine . . .]).

    hawk
  • But what most concerned this coalition were the two large bodyguards who stood outside Fenne's office that afternoon. The pair wore large pouches strapped around their waists, leading some - including Pixelon interim CEO Paul Ward, according to a lawsuit - to believe they were armed.

    You can't keep anything hidden from top CEOs these days...

  • But especially on the field of data compression, there /are/ tons of people coming up with record-breaking, never-before-seen compression rates. Of course they can't say anything specific because they're trying to get a patent on it... And money. Some of the claims for lossless compression ('infinite compression schemes') even are proven to be false (counting argument) and get on the nerves of comp.compression regulars. The FAQ [faqs.org] for that newsgroup sums up some of the cases (see items [9] and [10]).
  • If you want live news and TV like Video? Doing it over the Internet and by passing the Cable companies deterministic network is not an option at this time.

    I don't see why not. For the news, at least, a 10-second delay for buffering (or even a couple of minutes delay, if you have the buffer capacity) is perfectly acceptable.

    As the previous poster pointed out, buffering is only *not* a viable option when you need interactivity.
  • by Masem ( 1171 ) on Tuesday June 27, 2000 @08:10AM (#973806)
    Offtopic, but interesting...

    Actually, I forget the story, but it was about a small group of humans making the journey to Alpha Centauri at just under sub-light speeds (estimated time was about 6 years, IIRC). Their ship was equipped with lots of scientific equipment, and because of the members of the crew, they were making lots of scientific discoveries and sending them back to earth. Of course, as the distance between earth and them increased, the chance for error became large, so they found a way to compress their data. They wrote it all out, then applied a simple A->1, B-2, etc scheme to it. They then calculated 2^(first letter code)*3^(second letter code)*5^(third letter code) etc.. to make a large composite number. Then they looked in the near range of numbers around the one they calculated to find some number which had a minimal number of prime factors, and then transmitted the prime factorization and how far off that was from the large composite numbers. This can probably be within a few hundred bytes for messages of a million bytes or more. To decompress, all one had to do was to work out the number from the minimal prime number and offset, then find the prime factorization, and then decode from the exponents.

    Of course, in the story, by the time that the crew was only sending messages in this type, the earth was in war, and by the time the last message was sent when the crew reached AC, the intellicual ability of earth was very reduced; the last message could not be decoded because they had no way to calculate the first billion or so primes.

  • the EIC is the only one I know of that's refundable.

    However, there are some 100% credits, such as the various ones for tuition and raising children, as well as partial ones (energy saving installations, I think, and the on-again-off-again R&D credit . . .)
  • too many people on the net who don't have a fucking clue about anything, and all they do is take up bandwidth by downloading huge fuck-off Flash animations and waste server space with crappy Geocities home pages that have pictures of themselves and their dogs.

    I think you are entirely correct with this assessment of the average Joe Sixpack internet user. There used to be a time when search engines were flooded with hundreds of links to pr0n sites. Nowadays, although the pr0n sites are still present, there is also a deluge of the aforementioned personal homepages. These homepages lack any worthwhile content and thus spoil the signal to noise ratio of the internet, making it almost impossible to use a search engine to track down useful information.

    In order for people to gain an amateur radio license, it is first necessary for them to pass an examination. This certification process helps to teach prospective radio amateurs about good telecommunications practice and also tends to weed out people with a Geocities homepage mentality. Therefore, the (metaphorical) signal-to-noise ratio of amateur radio is far greater than that of the internet.

    Although this sounds drastic and is completely unfeasible, it would be nice if there was some sort of mandatory certification process before people are allowed to publish on the internet. The signal-to-noise ratio of the internet would improve greatly, and the interent would be easier to search and index. This would allow the internet to realise its potential as the greatest stockpile of mankind's knowledge, and this would be of benefit to everyone (including Joe Sixpack).

  • by Anonymous Coward
    need some tech people. If they sent in any video person, they would have seen right away the whole thing is a joke.
  • by Hermetic ( 85784 ) on Tuesday June 27, 2000 @03:28AM (#973828)
    This is not an internet con, but a con that happened on the internet. People get conned all the time, mostly older or gullible poor people ("lotteries are a tax on people with bad math skills" was a .sig I recently saw here), but also on the eager, greedy, and trusting.

    That this happened on the internet is simply because the opprotunity was there, much like the telephone/mail scam artists that prey on the elderly all over the USA. More and more hoaxes, scams, and chain letters appear on the internet every day because of the speed and anonymity inherent in the tool. I think that the most important point of this story was that the man got caught, despite all of the advantages that an "internet con" has.
  • The following excerpt of the article explains where the technology came from.

    The magician who performed this feat was Digital Motion cofounder and president Robert Dunning, a former marketing manager at high-end computer manufacturer GST-Micro City in Southern California. Dunning used highly specialized hardware and software, much of it still in the testing phase, designed by Sunnyvale, Calif.-based FutureTel and other niche companies in the graphics and publishing industries. Dunning's achievement, according to Dunning, Hauswirth and the third Digital Motion partner, was in assembling off-the-shelf components in a way no one else had done before to produce high-quality video. Soon enough, Stanley would hijack Dunning's work, wrongly calling it proprietary technology that Stanley himself had developed.

    I'm just wondering which "off-the-shelf" components these are.
  • I actually had to work with that guy at one point. At my last job we started using Pixelon's services for streaming movie trailers over the internet. Our first webmaster chose them because they broadcasted the Anaheim Ducks games. Their software was alright, but it was still only for broadband use. Anyway, I was wierded out by that guy's name, because I worked with a guy named Michael Fenne. And I remember him saying something about how his name was unique, and nobody else's in the world was spelled that way. Then we stopped using their services all of the sudden, and I wondered what the Hell was going on. So I ask my coworker Mike Fenne what happened, and he says that the feds think that he's the one that ran Pixelon. He didn't even know about the company, so obviously he was a little confused. Guess the FBI was confused too, because the names, and places of business were a little too similar to be coincidental. I guess it's a good thing that they found the impostor. He was a whack job anyway, and the company was like a rabid dog. They used to call all the time after the scandal first broke because they still needed clients. A very strange situation indeed. Sharkey
    www.badassmofo.com [badassmofo.com]
  • People are generally stupid when it comes to "new technology". They want a way to get their brains around it. Generally the intellectually laziest (and therefore the most attractive) way of doing this is to pretend it's just like something you already understand.

    The company was promising to make the Internet just like TV.

    It must have sounded like an answer to a prayer.

    In any case I suspect we may be on another round of stupidity as wireless Internet ramps up.

  • That article sounds like a storyboard for a Dilbert strip.

    Sounds more like a Coen Bros. movie, like Fargo or the Big Lebowski. It's so wild and improbable--with bizarre details like the exec jumping out of a moving cab, and another returning in the nick of time from a horse riding trip with mud-caked cowboy boots--yet it really happened.

    This would make a hilarious movie.


    ---
    Zardoz has spoken!
  • by Anonymous Coward
    Hmmmm....preacher versus con-man...hmmmm... Whats the difference? ;)
  • by jd ( 1658 )
    We already GET full-screen video over the Internet! It's called the Multibone, and it's doing very nicely, thank you very much. I'm able to receive NASA SELECT at full NTSC resolution, in full colour, without problems. Any problems other people have with those puny PtP systems, which overload the network.

    If you want video, you want multicasting. Not some new-fangled compression system, that's so much snake-oil.

    IMHO, the idea of everyone getting full-screen video to their homes is one that CAN be realised today, with NO new code, just a lot of heckling of ISPs. The ISPs are the reason confidence tricks of this kind are even possible. If they gave the full potential of the Internet to their customers, then there'd be far less demand for more.

    The ISPs are therefore as guilty as the con artists for stunts like this. If you artificially create a demand, by blocking supply, then you will create a market for people who claim to be able to beat the blocks.

  • by DeadSea ( 69598 ) on Tuesday June 27, 2000 @04:49AM (#973841) Homepage Journal
    Not so much of an internet con.

    More of a dot con

  • It WILL work under Winblowze with Netscape 4.7 too. Of course, it had to buffer several megabytes (!) before it would play. Not quite ready for the 56K modems, ISDN or frankly anything less than 1 Mbps. The resulting image quality looks like a 10 year old GE with a misaligned yoke.
  • by Big Torque ( 196609 ) on Tuesday June 27, 2000 @04:56AM (#973844)
    It seems that more and more people want full screen Video over the internet. Well I truly think it will be a while before this happens. The problem is not bandwidth but the undeterministic nature of Internet traffic (what some venders like to call the Quality of service.) I maintained a distance learning classroom for a University that had two full screen connection (one each way) on a signal T1 1.5 MB using H320. It ran as smooth and was a clear as any cable TV connection. I tried to do the same with H323 on a 100TX connection over IP using 350MHZ P2 and software compression and we are back to very small unclear picture. Add just a small amount of competing traffic and things went south quick. The H232 connection was good with hardware compression if there was no competing traffic but was never as good as H320 over a T1 at 100mb!! Forget doing this on the Internet. This problem is well understood. I wish I knew how he was able to get as fare as he did with out some one like me asking OK where is the magic and how do get around the deterministic problem.
  • by Anonymous Coward

    Not many people have had the experience of meeting a conman like this. I have. Twice. They have an almost supernatural force of personality and charm. They can make the most baldfaced lies and outrageous claims, like they were in the CIA and sold computers to Saudi oil barons, and they seem reasonable.

    For any normal person such claims would fall flat on the ground, but people like this are not normal. They hack people the way that many of us hack computers. They know all the little ins and outs that let them get root on people's personalities.

    If you find yourself entangled with a person like this it seems like there's no escape. They have a magnetism that draws people in and holds them there. You work the 36 hours and do the prayer meeting because all of your coworkers are. Because it seems like there's no way out.

    If anyone finds themselves in a situation like this. Like I once did. You run. You cut your losses, no matter how big they may seem at the time. You cut all your losses and get the hell out.

    A few pointers on guys like this:

    1. For some odd reason they are all dogmatically religious. Born Again Christians with this talant are common
    2. If you work for such a person you feel trapped, and want to leave, but somehow can't.
    3. They are terrible at managing money, and their financial affairs. Their businesses have in my experience always used shady accounting.
    4. They live well beyond their means. They have to keep conning because they're always a little overextended, and have to keep pushing.
    5. The ones I dealt with had a sort of Christ complex. Although they treated everyone like dirt they put on airs as though the employees were bleeding them dry.
    6. They will never commit to anything in writing. Best way to find out if you've got a monster on your hands is to get the promises in writing. This will usually provoke a profoundly emotional response.
    7. They never take personal responsibility for anything. Everything that they do wrong is someone else's fault.
    8. A person like this will use your mistakes against you to trap you into making further mistakes. They will entagle you in a web of obligations and half-truth's that you cannot escape from. This is why the only way to deal with these people is to cut your losses and run.

    I hope this helps!

    PS: If you're feeling brave you can attempt retribution for your losses. But these folks believe in an eye-for-an-eye with interest.

  • Wow. The scary thing is the amount of money that he managed to sucker out of these people. I mean, we've all heard of conmen before. But $40million? That's a whole lotta cash. But all this actually proves is:

    1. VC's have too much cash, and are too quick to throw it away at any old IT startup.
    2. People have become so excited by the whole Internet and dotcom "bubble economy" that they will risk a whole lotta cash on the slim chance of making a quick buck.
    3. People are easily fooled by technology (As an example, one of the coders who worked at Pixelon said "They took an existing Windows player and modified it slightly, then called it our own", and the computer they "desgined" to encode the video was built from off the shelf components)
    Now the scary thing is, this man can't be the only one to have the idea. How many more of these con-artists are there now on the internet?
  • by afc ( 12569 ) on Tuesday June 27, 2000 @03:35AM (#973855) Homepage
    Preacher-turned-conman is a redundant term, at least if you judge by the crop of televangelists in the US...
  • Investing in internet startups is such a risky thing that you expect to be coned sometimes. You assume that most of the ventures you put money into will go nowhere. To the goy who has dumped $x million into a venture lousing your shirt because the market isn't ripe for your product, the product comes out after a superior competitor or doesn't work at all is irrelevant. You sometimes louse all your money.

    Venture capitalists survive by NOT putting all the eggs into one basket. The only thing special about being taken by a conman is that you will never deal with that person again. Other failed ventures are water under the bridge.

    Look at it this way: If someone came to you 5 years ago and said he was going to build a 128 bit CPU that would run x86 instructions in software at native speeds with less than 1 watt of power would you buy in ? The truth is all the really cool investments look far fetched on the surface and you would need months of study before you can make an educated guess as to weather it's flatly impossible.

    VCs don't have the time or the inclination so they spread the risk around and louse a little on things like this. If you invest in 5 pixelons it only takes 1 transmeta to wash away all your pain.
  • So? People get what they deserve and if this helps get rid of some people too stupid to know better then it has only done the Internet a service. Since the rise of services like AOL there have been far too many people on the net who don't have a fucking clue about anything, and all they do is take up bandwidth by downloading huge fuck-off Flash animations and waste server space with crappy Geocities home pages that have pictures of themselves and their dogs - who gives a rat's arse about them?

    In fact, I think the way foward here is for the Internet to be restricted to those who have the brains to pass a test on basic technical skills (such as what is UDP or what port does HTTP use) and general net etiqutte. At least this way we'd only get people who would use the net for something good and maybe the corporate dominance of the net would be stymied.

    Unfortunately the US, which still seems to think that the net is their private playground (not suprising since the average USian thinks the US is the entire world) and refuses to accept a global controlling body, is so subservient to corporate interests and their well-paid lobbyists that getting this kind of legislation in is next to impossible. Thank God I live in Europe, where the kind of rampant capitalism the US practices is tempered with a more humane socialist brand of politics.


    ---
    Jon E. Erikson
  • by Chuck Chunder ( 21021 ) on Tuesday June 27, 2000 @03:44AM (#973862) Homepage Journal
    Praise be to the Lord, I've been trying to find the URL for Slashdot everywhere!

  • is, IMO a very aggressive technique, and one which I believe they have been forced to back off from.

    In general, people call things "brands" which aren't brands. The classic example of a brand is Harley-Davidson -- people are prepared to pay extra for what is, objectively considered, an inferior motorcycle, because it is a Harley Davidson.

    Are people prepared to pay more for books, because they come from Amazon? If not, then how can they justify capitalising marketing expenditure? Marketing a "brand" which does not command a brand premium may be a sensible thing to do, but it's not creating anything which is separable from the business as a whole; ie, I believe that Amazon are misleadingly flattering the P&L by bringing internally created goodwill onto the balance sheet.

  • by yankeehack ( 163849 ) on Tuesday June 27, 2000 @03:45AM (#973864)
    You find a document on his computer outlining a nefarious scheme involving hair dye, colored contact lenses, and plastic surgery.

    That article sounds like a storyboard for a Dilbert strip.

  • I sometimes cannot tell the difference anymore. I guess if a company that gets a ton of VC money fails, then it is a con. If the company manages to do something with the VC money then it is a entrepreneral success-story, right? Well, that is the name of the game, isn't it?

    My question is how legit is this news lead anyway? I ask because the reporting looks suspect.
  • My first big web job was building a site for a pyramid scheme company...we put up dozens of pages literally overnight at this guy's request, and it took us MONTHS to finally get paid.
    I felt slimy writing code for that man. (Shudder)
    These cons are all over the net, you're right, but judging from the number of 'read this email! it's true!' notes I get forwarded to me by clueless coworkers and family, the fact that this guy got caught is pretty amazing. Stupidity, and more importantly ignorance, go unchecked online. "If it's on the computer it must be true." Ack.

    The Divine Creatrix in a Mortal Shell that stays Crunchy in Milk
  • by erroneous ( 158367 ) on Tuesday June 27, 2000 @03:54AM (#973882) Homepage
    > there have been far too many people on the net who don't have a fucking clue about anything

    That's not a bad thing. Maybe through the 'net they'll learn.

    > downloading huge fuck-off Flash animations

    Actually, Flash animations are remarkably small compared to gifs.

    > waste server space with crappy Geocities home pages that have pictures of themselves and their dogs - who gives a rat's arse about them?

    I think that they do, and their families and friends.

    The net is a magnificent thing precisely because it allows the massess access to publish to something available instantly world-wide. That is a power undreamed of even ten years ago for the overwhelming majority of the worlds populace... and is rapidly becoming a reality.

    I think your elitist vision of a net only accessible to the privileged educated few would be quite horrible

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