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Comment by neaden | Hacker News Reader

Serious question, could this be money laundering, bribery or something else shady? The fact that the owner made $2.5 Million on a stock sale for a seemingly worthless business seems like it could have some less than legal explanations.

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My guess was defrauding Chinese as they were the major investors in it.

More likely the Chinese investors needed a way to evade capital controls in China and this was the vehicle.

How would this work for them? Is it easier if you are a big Chinese investor to buy stock in a small American company than to purchase it in a F500?

It's basically reverse money laundering to turn money that the government knows about into money that the government doesn't.

1. Make a really bad investment in an overvalued small company.

2. Company passes some portion of the money back to you in a way that the government doesn't know about.

3. Company goes bankrupt.

4. The party knocks on your door and asks you where all your money went and you point to a failed foreign investment.

Interesting, thanks.

This would be a poorly executed instance of this strategy right? Who in their right mind is getting fooled by a 100m dollar sandwich shop?

would you have known if this story wasn't posted? Plus every small shop has potential....1 trillion, billion stores all over the world so the value is forward looking ;)

It used to be easier to do this via rolling at the big tables in Macau.

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