Repo Men
Hertz
When you run a car rental company and the world enters a global pandemic that causes business and recreational travel to come to a halt, your business may have problems. Rental car company Hertz had big problems - a massive debt load and a surplus of financed cars sent the company into bankruptcy not long into the pandemic.
Then, for some reason, Hertz briefly became a meme stock and tried to sell a bunch of its shares while warning they could be “worthless” which they turned out to be - investors who took a gamble on the company when it was trading at a few bucks got wiped out in the restructuring.
The company continued to rent cars as it wound its way through bankruptcy last year. Everything looked set to be resolved so Hertz could start fresh, but there’s at least one case holding things up.
One thing Hertz apparently does is file police reports accusing its customers of stealing its cars. Many of those reports are wrong and are sending innocent people to jail:
[Paula Murray is] now one of 230 plaintiffs suing Hertz for false arrest and in some cases prosecution. The lawyers for this cohort say they know there are more cases out there – warrants for arrest that people who rented from Hertz years ago don’t even know exist, like ticking time bombs waiting to explode their lives at any moment.
Uhhhhh, what? Court documents reveal Hertz files around 3,300 police reports a year, and it’s unclear how many are valid. The plaintiffs in the suit have had their lives upended by the false claims:
According to court documents, the current group of claimants has spent a total of 2,742 days in jail or prison because of false arrests. That’s more than seven years. They’ve endured a collective 3,600 months of prosecution. Some took plea deals, admitting to stealing cars they didn’t steal, just to make the ordeal stop.
These people who were wrongly arrested and imprisoned have become creditors in the Hertz bankruptcy, and may hold it up while a judge sorts out their claims.
The problem, they claim, is that Hertz doesn’t notify the people it files police reports against:
The lawsuits against Hertz allege a pattern of missing inventory in which Hertz, instead of conducting internal investigations to locate vehicles or correct records, files police reports immediately and pushes the issue to the courts.
[…]
During a lawsuit in Philadelphia in 2017, before the Hertz bankruptcy, Hertz’s national vehicle control supervisor took the stand and admitted on cross-examination that police reports do not always contain accurate payment information, contacts with customers, and that Hertz does not correct or supplement reports that it knows are false or misleading.
That is pretty damning! Elsewhere, two airport police agencies refused to work with the company after repeated false reports:
Court records show that police at the Indianapolis and Louisville airports did just that. After multiple reports of stolen vehicles that ended up being located on Hertz's lots, those agencies reportedly said they wouldn't take new reports from the company.
Hertz, of course, claims this is all a big misunderstanding, and its lawyers fought to hide how many police reports the company files from the public. Whether it’s two hundred or two thousand or twenty thousand people who’ve had their lives disrupted because Hertz employees can’t locate a car or prefer using the police to handle customer service disputes, the company clearly needs to fix these insane policies as it emerges from bankruptcy.
Bitfinex
A few weeks ago I wrote about the Bitcoin Couple. I wondered:
I don’t know how this would work, but it is an interesting thought experiment - if you had 2 Bitcoins in your Bitfinex account in 2016 and you get those back, you’ve just had a $60,000 dollar windfall. There might be some hacking victims who are about to become very rich. That’s a nice surprise! Or, maybe Bitfinex keeps a bunch of the coins since they did compensate customers somewhat when the hack happened? Would you be mad if you were a victim who received $600 for your stolen Bitcoin in 2016 and the exchange recovers it when it’s worth $40,000? I don’t know.
Well! It turned out the situation is way more complicated and dumber than I anticipated. Bitfinex had taken steps after the hack. First, it spread the losses amongst all its accountholders:
After the attack in August 2016, when a hacker made away with more than 119,000 Bitcoin, Bitfinex allocated losses of more than 30% to all customer accounts.
I was not reading or writing about crypto in 2016, but this is an email you do not want to receive from the place you keep your Bitcoins. Oh, we were hacked, and we’re taking some of the losses out of your holdings. Then they did this:
It then created and credited BFX tokens to customers at a ratio of one for every $1 lost. Within eight months, all holders had those tokens redeemed, or had exchanged them for iFinex capital stock.
So, if you lost some crypto, you got a BFX token of equal value, and you could redeem it for stock in Bitfinex. Which everyone did. Okay, cool. Does it get even more complicated? Hell yeah it does!
Bitfinex also created another coin named Recovery Right Token, or RRT, for holders that had converted their BFX tokens into iFinex shares. In case the stolen Bitcoins were ever recouped, recovered funds would be distributed to RRT holders, at up to $1 per RRT. There are currently 30 million RRT tokens outstanding, according to Bitfinex. That could lead to a reimbursement of up to $30 million.
So those BFX people got RRT tokens, which were worth a dollar, in case the Bitcoins were recovered. Now that they have been, those people can get $30 million back. Also, also, also:
Bitfinex plans to use a portion of at least 80% of the recovered net funds to buy up and destroy another token called Leo it issued in 2019 to beef up its coffers.
Ahhhh. Okay, so if I have this straight, Bitfinex did things to make the people who lost their Bitcoins whole, at 2016 Bitcoin prices, but now it’s “recovered” most of the Bitcoins and they’re worth $44,000 instead of $600. Understandably, some of the people who did that deal in 2016 are pissed! As usual, the lawyers will sort it out:
Much will depend on what the user agreement Bitfinex had people sign in 2016 said, said Kyle Roche, of Roche Freedman LLP, which is involved in litigation against Bitfinex.
Further complicating matters is that, back in 2016, a lot of people did not want to verify their identities to trade Bitcoin:
Another difficulty may lie even in verifying customer identities. Even today, anyone with an email address can simply open an account on Bitfinex, without any further verification for most basic functions.
And! The Department of Justice technically still has the Bitcoins, and can refuse to give them all back to Bitfinex:
“I don’t believe DoJ will turn $3.6 billion to an organization that can’t identify who this Bitcoin belongs to,” Silver said. iFinex had previously settled with the New York Attorney General over false claims related to its Tether product, the world’s most popular stablecoin.
Many observers point out that creditors of defunct crypto exchange Mt. Gox are still waiting to receive reimbursements under a plan that became final and binding in November. Mt. Gox closed in early 2014 after losing the coins of thousands of customers.
There is something funny about one of the largest crypto exchanges having to negotiate with the Feds to get their Bitcoins back, especially when they’re still under regulatory scrutiny from those same Feds. I would hazard a guess the Feds will want assurances that the Bitcoins they are returning did not originate from criminal activity - it would not look good for them to be returning, like, cartel Bitcoins - which Bitfinex cannot possibly prove. This might well turn into a KYC nightmare for Bitfinex, and the government is probably in no hurry to give the coins back.
In another twist, the couple may not have actually stolen the funds:
Who hacked the Bitfinex is still unclear as well, and could be pertinent to any distribution, Silver said. The married couple who were arrested on Feb. 8 were accused of money laundering, not stealing the coins.
This is all so complicated! Even if the couple pleads guilty that could take a year to sort out, and it could be years before anyone gets any Bitcoins back. What a mess.
Honorlock
It is hard being a college student during a pandemic, learning remotely while also racking up huge debts. Colleges have been trying to crack down on plagiarism since the invention of the search engine and the mobile phone, but companies like Honorlock have taken it to whatever level this is:
The company, whose business has boomed during the pandemic, promises to ensure that remote students don’t cheat on exams through AI-powered software used by students that “monitors each student’s exam session and alerts a live, US-based test proctor if it detects any potential problems.” The software can scan students’ faces to verify their identity, track specific phrases that their computer microphone captures, and even promises to search for and remove test questions that leak online.
I can understand the appeal of this marketing pitch to a college administrator, but it sounds pretty scummy? We talk a lot about why it’s a bad idea to give biometric data to private for-profit companies, and ‘preventing cheating on a remote college exam’ is a pretty weak argument for handing over personal data on thousands of students.
Anyhow, in addition to the creepy monitoring features, Honorlock does this:
The company, according to its materials, provides a way to track cheating students through what Honorlock calls “seed sites” or others call “honeypots”—fake websites that remotely tattle on students who visit them during exams.
Honorlock has created a network of websites and ranked them in search engines, often with specific answers to questions from its client schools, and uses those to entrap students allegedly searching them during exams:
Before, students searching online for answers may simply have turned up nothing, while now, a potentially incriminating website will be there to tempt them.
So the company creates what are essentially phishing websites, then captures a student’s IP address and browser behavior before ratting them out to administrators - without even giving them the answer! Rude.
I am the child of educators and have watched my father grade thousands of papers over my lifetime. This, in particular, resonates with me:
For educators, the draw of software that promises to automatically track down cheaters is clear. But some experts argue that it isn’t a problem that can or should be fixed by advances in technology to surveil students but a rethinking of how those students are tested in the first place.
There are ways to determine whether your students understand the material in ways that don’t create an adversarial relationship:
[Sarah] Eaton proposes that educators should consider a more radical rethinking of testing, one that doesn’t rely on surveilling students. Punishing students for using their devices fundamentally goes against how learning works in the age of the internet, Eaton says, and the cat-and-mouse game of sussing out possible cheaters isn’t working. Moving to a better system might mean shifting to more oral or open-book exams, for example, which still demonstrate proficiency without the specter of simply Googling answers.
Yes! Our society’s inclination to use tech to surveil and punish people for breaking the rules can turn something that should be enjoyable - learning, getting a college degree - into yet another stressful, unpleasant encounter with authority.
Ken Paxton
We have talked about Ken Paxton, attorney general of Texas, who is somehow simultaneously racking up criminal charges and investigations and spearheading what could be a critical lawsuit to reign in the worst abuses of big tech. The man contains multitudes.
Well, he also won his primary and will be back on the ballot this year!
In the Republican primary on Tuesday in Texas, Mr. Paxton won 43 percent of the vote, a soft showing for an incumbent but one indicative of the three well-funded challengers who saw him as politically vulnerable.
This guy sums it up:
“The voters of Texas will tolerate a great deal,” said State Senator Kel Seliger, a moderate Republican who is a former mayor of Amarillo. “They think if somebody is ideologically in sync with them, that’s what matters. I would have thought in Texas that moral example is more important, but apparently it’s not.”
Paxton says it’s all a witch hunt - including the securities-fraud charges he’s been under indictment for since 2015 (??) and has his office investigating the FBI’s investigation of one of his wealthy donors. I don’t know.
The Mafia
Last year we talked a little about how modern mobsters keep getting in trouble for texting about their crimes. Old school mobsters missed the days when people had conversations in parking lots covering their mouths, or whatever. Anyhow, it turns out that while the mobsters doing the crimes have let their standards slip, their accountants have not:
A recent scientific paper out of Florida International University examined data from Italian criminal records to determine the quality of accountants affiliated with organized crime groups. As it turns out, Mafiosos tend to hire meticulous, careful, and detailed accounting firms to cook their books with their care — and, perhaps more interestingly, that being associated with the mob has no negative impact on the accounting firms' reputations or non-mafia-related work.
Well, that’s nice for them. Once in awhile you might represent a criminal organization that becomes a little too well known and you have to dump them as a client and disavow the work you did for them, but mostly mafia accounting is good work if you can get it.
Short Cons
ProPublica - “There’s little to no evidence that the video claiming the explosion was a missile strike ever circulated. Instead, the debunking video itself appears to be part of a novel and disturbing campaign that spreads disinformation by disguising it as fact-checking.”
Dealbook - ““Every company had left America,” he recalled recently. “The entire U.S. mask supply was under foreign control.” He remembers warning customers, “If there’s a pandemic, we’re going to be in trouble.””
NBC New York - “Temporary paper license plates can be found on cars in almost every New York City neighborhood. Some are legitimate, but authorities say most are not, especially when it comes to Texas temporary plates.”
Yahoo! News - “A new report from the Consumer Financial Protection Bureau (CFPB) found that U.S. consumers hold $88 billion in medical debt as of June 2021.”
Tips, thoughts, or mafia tax tips to scammerdarkly@gmail.com