In 2004, Eduardo Saverin registered a business in Massechusets. The company was registered as “The Facebook Inc.” This is a story that we’re all familiar with: a Harvard sophomore Mark Zuckerberg built a website that has taken the world by storm. This is the story that was told to Savern’s investors. He said that Facebook was changing the world. He said that it was used by the hundreds of millions. There’s just one problem. Zuckerberg and the website never existed. Today, the Securities and Exchange Commision has released documents after an investigation detailing a long running Ponzi scheme that ends with valueless stock being sold to the general public.
At first the scheme was easy. The Facebook was an exclusive site. He told his investors that only Harvard students could use the site, and that’s why the investors couldn’t see it. In order to raise more money, Saverin had to convince investors that the site was growing. He continued the story, acting like it was open to other colleges, and then high schools. This ploy got him further, but at some point, in order to keep the investment money flowing, he had to open the fake site to the public.
This is where the scheme got much more complicated for Saverin. Once open to the public, his investors wanted to join the site that didn’t exist. Saverin hired a team of developers in India to put together a basic functioning website. He then used Mechanical Turk to create tons of fake users in the database. This was just enough to convince the investors that The Facebook was legit. Some questioned why they couldn’t see any information from the claimed millions of other users. He told them that they could only see content and profile information from their “friends”. This was the start of social media as we know it.
The developers had left the website open to the public and a few people started signing up for the website. Worried that people might find out that the website was only a sham, he started hiring cheap foreign labor to play the part of the new users’ friends. They would spy on the friends of the users that were joining and create fake profiles and content for those people. Even today, Facebook only has about 2,000 users, and their friends’ activity is being written by non-english speaking people, which explains all the bad grammar and misspellings.
Eduardo Saverin fled the United States years ago and continued to run this scheme. He just renounced his citizenship and his whereabouts are unknown, but the FBI would like to know any information you may have. With the release of the SEC’s investigation, Facebook’s stock is expected to plummet, as Facebook has no real assets. Mockcrunch has placed a target price of $0.01 and a SELL rating on FB.