I’ve recently binged on watching videos about frauds and con men. There was a 2016 documentary called Sour Grapes, about Rudy Kurniawan, a wine connoisseur with supposedly an impeccable palate who could tell one varietal and vintage from another with high accuracy. A collector with a vast array of rare wines that he began to sell. Except, he was an alleged fraud, faking bottles, labels, and contents. Kurniawan fooled many wealthy and influential people who prided themselves both on their knowledge of wines and their worldliness and savvy. Tens of millions in sales.
Then there was Art and Craft, which was about art forger Mark Landis, who for 30 years created fakes that he gave away to universities and museums. Never charging a penny or claiming a tax deduction, apparently what he did wasn’t illegal.
But more often, fraud and cons, when done in big business make for great stories and always seem to come around. There were the dot com corporate accounting scandals years ago, but the people who run corporations don’t necessarily learn from experience.
In September, founder and chairman Trevor Milton of electric truck manufacturer Nikola, which had received $2.5 billion in investment according to Crunchbase (a great resource if you’re looking at venture-backed companies, by the way), abruptly resigned. The instigating factor seems to have been a report by Hindenberg Research that claimed “an intricate fraud built on dozens of lies over the course of its Founder and Executive Chairman Trevor Milton’s career.”
What journalists need to remember, though, is that following such stories can bring forms of danger. People in power and large financial interests may attack the reporters in an attempt to shut down unfavorable coverage. Theranos CEO Elizabeth Holmes used a speaking spot at the Wall Street Journal’s WSJDLive tech conference in 2015 to attack the paper’s reporting on the startup’s business claims. The company eventually shut down and Holmes is scheduled for a criminal fraud trial in 2021.
The Financial Times caught German payment company Wirecard in what would turn out to be a $2 billion accounting scandal that would eventually result in the company’s dissolution and the arrest of CEO Markus Braun.
Wirecard didn’t like the process of exposure and tried “intimidation, surveillance and conspiracy theories” of the journalists providing the coverage, as target and Financial Times reporter Dan McCrum chronicled. Trying to summarize this tale could never convey the how bad it was. Every business journalist should read it.
The lesson: If you’re going to investigate claimed serious wrongdoing by a large company, be prepared. Your publication or outlet must be ready to have your back, both in spirit and practically, as with legal backup if necessary. Be painstaking, complete, and scrupulous in your research, reporting, and writing. And prepare for a hard slog that will be worth it.