“30 Under 30” Pipeline to Prison
BY: Katie Negron, RBFL Student Editor
The Forbes 30 Under 30 List has grown to showcase and introduce people making substantial differences and innovations in their given community. Broken into several categories including tech, finance, medical, entertainment, and more, the list has evolved to become a notable achievement for many younger entrepreneurs. Over the course of the list’s development, an interesting pattern has surfaced that shows the connection between alumni of the list and their propensity to commit white collar crimes.
Elizabeth Holmes, Sam Bankman-Fried, Carline Ellison, and Martin Shkreli are some of the most infamous examples of this pattern. Each is a young, successful entrepreneur who experienced radical success and inevitable downfall. Why is there this “pipeline to prison” phenomenon stemming from the list? Perhaps it is attributable to the founders’ personalities, the industries they occupy, or most likely, the nature of their large, private companies that provide ample opportunities for fraud. The list also showcases a different trend from years past where infamous white collar criminals tended to be older, white men. Many of the notable names today are younger entrepreneurs of different backgrounds.
When creating their businesses, many of the common issues began and grew in the early stage of the company while they were raising funds and building their brands. Given that companies are staying private longer, rather than aspiring to IPOs early on, that provides ample time and opportunity for many of the young and eager entrepreneurs to take advantage of the circumstances. The private nature means a minimal amount of oversight as compared to public companies.
Private equity and startups have grown together to create a peculiar relationship. There is an interesting distinction, or lack thereof, in this realm of business where it is difficult to determine lying versus selling an idea. To get investors and funding, many entrepreneurs sell their idea with the hopes of generating funding to make them come to fruition. The major question is, where is the line drawn between lying to investors about unfeasible goals and truly just needing funding for their idea to become fruitful for them and investors?
While it is never the intention to stop the flow of innovation and creation of companies, steps should be taken to try and deter this kind of fraud from taking place while companies are in this private stage. This phenomenon is on the radar of regulatory agencies as they try to find the best solutions going forward to avoid the next possible Elizabeth Holmes.
SOURCES:
Lisa Myers, A Brief History of White-Collar Crime, Northwest Career College Blog (Oct. 5. 2020),
https://www.northwestcareercollege.edu/blog/a-brief-history-of-white-collar-crime/.
Parmida Enkeshafi, Universalizing Fraud, 18 Duke J. of Const. L. & Pub. Pol’y Sidebar 47 (2022).
Stonks.com (@Stonks_dot_com), Twitter (Nov. 29, 2022, 2:09 PM), https://twitter.com/Stonks_dot_com/status/1597669014246785024.
Timothy Smith, FTX: An Overview of the Exchange and Its Collapse, Investopedia (Jan. 5, 2023),
https://www.investopedia.com/ftx-exchange-5200842.
White – Collar Crime, Cornell Law School, https://www.law.cornell.edu/wex/white-collar_crime#:~:text=The%20Commerce%20Clause%20of%20the,to%20regulate%20white%2Dcollar%20crime (last visited Feb. 9, 2023).