Naveen Jain's Latest Quest For A Trillion Dollar Company May Be In Trouble

from the how-about-that? dept

Naveen Jain is nothing if not confident in himself. Back in 2000, as founder and CEO of InfoSpace, he famously declared both that InfoSpace was bigger than the internet, and that it would be the world's first trillion dollar company. More specifically, he said: "There are two kinds of people in this world... those who don't believe in God, and those who believe in God and InfoSpace. That's OK -- the nonbelievers will be converted when we become a trillion-dollar company." Now, it's one thing to be confident, but it's another thing to be cooking the books to try to get there. After InfoSpace imploded and Jain was sent packing, an investigative report uncovered all sorts of evidence about how much of InfoSpace's revenue was a huge scam, involving outright lies and "lazy susan" deals, where InfoSpace would "invest" in a company, who would turn around and pretend to buy InfoSpace services as a way to boost revenue.

Jain moved on and started a new company called Intelius, which claims to help you get background information on people -- though it's not hard to find many, many, many people who claim that the information is next to useless. Still, it's managed to bring in a ton of revenue, and with that has been planning to go public. However, Mike Arrington did a fantastic bit of sleuthing to discover that much of that revenue seems to come from a very questionable method.

Basically, Intelius gets you to cough up some money for the "information" it has on someone. Afterwards, it asks you to take a short survey, promising to give you $10 for your time. The survey is quick, but down below, in tiny gray-colored hard-to-read print, it notes that in submitting the "survey," you're actually agreeing to sign up for a $20/month "service" that, according to Arrington, doesn't appear to do anything other than charge you $20/month. As for that $10? Well, it's never mentioned again (nor is the $20/month you'll be paying... other than on your credit card bill). The "service" is a separate company (though Intelius gives them your credit card info), but clearly pays Intelius a fee for each signup. Arrington does a few back of the envelope calculations and figures that nearly all of Intelius' "growth" comes from these scammed deals, which, some claim are also difficult to cancel.

The whole thing stinks, and you would think that, given the situation with InfoSpace, the backers of Intelius' IPO would have done a bit more due diligence before agreeing to take the company public.


Reader Comments (rss)

(Flattened / Threaded)

  1.  
    identicon
    Paul, May 30th, 2008 @ 12:07pm

    Snooper's Scammed?

    Let's see if I understand this. A company offering to sell my personal information is ripping off the people who go there to get it? May they all climb on a big bus together and drive off a really high cliff.

     

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  2.  
    identicon
    Oliver Starr, May 30th, 2008 @ 2:28pm

    Criminal Executive Officer?

    At what point do CEOs like Naveen Jain actually pay for committing these kind of acts? Clearly this morally bankrupt individual will stop at nothing to fleece bucks out of an unsuspecting public.

    Why is it that our country invests hundreds of billions supposedly in the act of bringing criminals to justice yet high profile white collar criminals grace the covers of our magazines and newspapers and feature prominently in newscasts and other television shows, yet they are never indited or even charged seemingly regardless of how many people they hurt, how much money they steal or how many securities laws they break?

    If our moral compass as a society is so completely deranged that we not only fail to prosecute people like Jain we actually reward them for their actions by making them wealthy, than I suppose it is no surprise that we have a corporateocracy in place of a democracy and that it is to the corporatogagues* and their preistecutives* that we pledge our fiscealty*.

    At the end of the day through our bastardized election process and the failure of will that allows it to be usurped to the point of uselessness, we support their hegemonic agenda which will ultimately result in the enslavement of our future generations.

    More here: OWStarr.com

    Oliver Starr

    *yes, I realize these are words you haven't seen before. That doesn't mean that they shouldn't be added to our lexicon as they accurately describe our current reality in ways that haven't been necessary before.

     

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  3.  
    identicon
    Yosemite1967, May 30th, 2008 @ 4:00pm

    And Martha Stewart's in prison?

    Didn't Martha Stewart go to prison for something far less criminal than what this guy did? Why is he not still being allowed to hurt people? If you study it out enough, you'll find that if anyone was anywhere close to being single-handedly responsible for the dot-com crash of 2001, it was him.

     

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  4.  
    identicon
    James, May 30th, 2008 @ 6:28pm

    He bought off the SEC

    He would be in jail, but he was able to pay off the SEC and actually convinced them to take his side in court. The guy is a crook, plain and simple. Investors in his company deserve what they get.

     

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  5.  
    identicon
    Steve, May 31st, 2008 @ 2:40am

    w

     

    reply to this | link to this | view in thread ]

  6.  
    identicon
    Steve, May 31st, 2008 @ 2:40am

    w

     

    reply to this | link to this | view in thread ]

  7.  
    identicon
    Steve, May 31st, 2008 @ 2:46am

    Who are the idiots underwriting this IPO scam

    Who are the idiiots underwriting this IPO scam. If this is allowed to continue to IPO, then anyone can see CLASS ACTION written all over this agaisnt the underwriters! In reality, the class action lawyers will be the ones to make money on this, and any idiot underwriter is going to pay dearly. Warning to whichever young MBA at the underwriter that is thinking this is a good deal-get ready to move back with your parents, becausse your career is going nowhere once this mess hits the fan. Don;t say you weren't warned .

     

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  8.  
    identicon
    Lindsey, Jun 2nd, 2008 @ 9:03am

    Really?

    Singlehandedly responsible for the dot-com crash? Give me a break. That's just a really, really ignorant (and downright silly) comment.

    Vilify the guy all you want, but let's at least be realistic here.

     

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  9.  
    identicon
    VM, Jun 2nd, 2008 @ 12:36pm

    Check out Washington State Law...

    with regard to cell phone directories. That little bit of law is in process all because of Intelius' shady dealings.

    More info here: http://www.rcrnews.com/apps/pbcs.dll/article?AID=/20080117/FREE/126346253/0/sub

     

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  10.  
    identicon
    Not My Cell Phone, Jun 17th, 2008 @ 7:57am

    Not My Cell Phone

    Interesting, Intellius already publishes a large number of unpublished listings. I wonder how many of them are cell phones. Looks like they are exposed to a fine of $50,000 for each one of them that they provide if this bill passes. This should help balance the state budget

     

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  11.  
    identicon
    Ralph Jones, Jul 30th, 2008 @ 2:42am

    IS this scam still going on?

    Any news on whether this scam is still going on? Are these crooks still thinking they can get away with an IPO? TcchCrunch nailed these guys-talk about fraud and scams. Anyone who buys this stock w wold do better just putting their money n fire and roasting hot dogs--you would get allot more more for your money that way. See http://www.techcrunch.com/2008/05/29/naveen-jains-intelius-prepares-to-go-public-how-much-of-their-r evenue-is-a-scam/

    When is anyone going to stop crooks like this? What type of scumbags wold work for a company like this?

     

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  12.  
    identicon
    James, Dec 24th, 2008 @ 1:40am

    Intelius still ripping people off?

    Came accross http://www.techcrunch.com/2008/05/29/naveen-jains-intelius-prepares-to-go-public-how-much-of-their-r evenue-is-a-scam I see on the web talk of a class action against these guys--how can the people at Intelius show up for work every day knowing that so many people think they are unethical and dishonest. I wonder if they just sit around and think its funny that they get away with ripping people off.

     

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  13.  
    identicon
    Tech Worker, Jan 3rd, 2009 @ 2:14pm

    Step 1: Find a qualified Sociopath. No morals, inflated ego and willing to rip off anyone required.

    Step 2: Inject 5 million in Venture Capital

    Step 3: Let your Sociopath run wild makeing outrageous statements to analyists that work for companies being paid through consulting fees.

    Step 4: The cheerleaders that mascarade as the financial press with jump on the story.

    Step 5: Cook the books.

    (a) You can move your accounts recievable around to create growth curves that don't exist. (15% growth this quarter!)

    (b) Convert investment money into revenue: Simply buy services from other companies and then have them use the money to buy services from you. (25% growth this quarter!)

    (c) Get creative with billing small customers

    Step 6: IPO the Company!!!!

    Talk about growth not profitabliity. (Revenue has gone up 25% last quarter). Talk about investment not profitablity. (Olympic Venture Partners invested injected 20 million in Venture Capital).

    Step 7: Stock goes up!!!!

    Step 8: Sell! Sell! Sell while claiming it has nothing to do with problems with the company.

    Venture Capital sells. Exectives sell. Small investors are holding on for the next up cycle.

    Step 9: Retire

    Step 9: Bankrupt Company!

    At this point you have enough money that those investor lawsuits can't touch you. You can also claim that things were fine while you were running the company.

    "Market conditions changed"
    "The problems were hidden by the CFO and underlings"
    "Things were fine while I was running the company."

    Step 10: SEC Comes to your Rescue.

    Christopher Cox does not believe in fraud. If you made money then you made it because you deserve it and these small investors are obvious liberals who hate the free market.

    Step 11: You win. Repeat!!!!

     

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  14.  
    identicon
    manoj, May 25th, 2009 @ 10:32am

    export country

    hi
    Exporting is if any good or sevice is brought out of one country and into another. producers. It is a good that is sent to another country for sale.[1] Export of commercial quantities of goods normally requires involvement of the customs authorities in both the country of export and the country of import. The advent of small trades over the internet such as through Amazon and e-Bay have largely bypassed the involvement of Customs in many countries due to the low individual values of these trades. Nonetheless, these small exports are still subject to legal restrictions applied by the country of export.

    ----------------
    manoj87
    ---------------
    lawyer directory-lawyer directory

     

    reply to this | link to this | view in thread ]

  15.  
    identicon
    art, Mar 10th, 2010 @ 3:20pm

    intelius is a scam

    intelius is a scam......maybe you should go into business in india......

     

    reply to this | link to this | view in thread ]

  16.  
    identicon
    SC, Jan 22nd, 2011 @ 2:44am

    Intelius CEO Naveen Jain is an international criminal, has a long history of perpetrating fraud, and should have been jailed years ago. Don't believe me? Google "naveen jain" and "fraud", and see how many hits you get. It's time to put this pile of sub-human excrement where he belongs. This piece of sh*t needs a fat bounty on his head. As in old-west style. It's a shame that this two-bit chav consumes oxygen, when there are higher-order, more evolved types of life far more deserving of it, such as the bacteria feasting on feces in your toilet.

    -SC

     

    reply to this | link to this | view in thread ]


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