The Bankrupt Billionaire

gone to c e S all by myself. I was shooting a ton of videos every day, both for How Stuff Works, my former employer, and the Forward Thinking video series. But one thing that caught my eye while I was there was a concept car called the f F zero one. The car looked super sleek, really futuristic, kind of a

mix between a spaceship and the Batmobile. The cockpit could hold one whole person, had a glass roof and racing bucket style seat, had a fin that extended from the back of the cockpit along the length of the rear of the car. And yeah, it was a crazy looking thing. Rather than a steering wheel, it had a steering yoke and you would plug a smartphone into the center of

the yolk. And it create a little display there. Likewise, the dashboard had, you know, several digital displays built into it, and it had kind of this sleek wrap around appearance. To get in and out of the thing, the cockpit would open along the top and you have to kind of scrabble over the side again, kind of like a

race car. And according to the reps who were talking up the concept car to the attendees, uh, the the idea was this vehicle could if it were operational it was not, it could go from zero to sixty miles per hour or arounds per hour in about three seconds, and it would have a top speed of two hundred miles per hour or about two kilometers per hour or maybe even more. And it had a total output of one thousand horsepower. The approach this company was taking was

pretty interesting too. The chassis, the representatives explained, was kind of a modular thing, and an electric motor would provide the power needed for the drive train with a motor position near one of the four wheels, and you could add electric motors and batteries to the chassis to boost

the vehicle's performance. So the F zero one that we were looking at, the one that was on display was to have four motors, one for each wheel, which would give the car such impressive specs, well, impressive theoretical specs, because like I said, it wasn't actually operational. The car was pretty much checking all the boxes for a concept car. It was sleek, beautiful, technologically advanced, and absolutely impractical. But

concept cars are not meant to be production vehicles. Their platforms for showing off different ideas, and some of those ideas might find themselves in slightly more modest vehicular designs in the future. The modular chassis was really the selling point for the company. With that approach, you could theoretically use the same basic chassis for lots of different models

of vehicles. A simple city vehicle might only need one electric motor it's not going to get a super high speed and just needs to be efficient, and suv that could go off road might need all four electric motors to provide the torque necessary to go over the terrain. But with this you know, business model, the company could potentially be extremely nimble when it came to producing different vehicles,

assuming that it could actually get things off the ground. Now, the name of the company showing off this car was New to me, it was Faaraday Future and had only been around for a couple of years, quietly working on the design. Everyone at ce S could see that the company was aiming to compete with Tesla for the future of electric vehicles that you know, had a lot of style to them. But today's episode isn't just about Faraday Future.

In fact, it's more about the man who provided a lot of the financing to Faraday Future for several years, a man who was running other businesses at the same time while also taking on the full time job of avoiding creditors in China, and a lot of what we'll learn will sound really familiar to those who listened to my earlier episodes about Ponzi schemes and so so on.

Although I want to be straight with you guys here, while the various incarnations of this man's businesses have been described as kind of being Ponzi schemes, I think that's unfair. I think it's different, um, and I'll get to why. But today we're going to explore the story of the bankrupt billion an air entrepreneur, jiahuit Ting. He was born in the north of China in the Shanshi province, it's a place filled with historic buildings dating back more than

a thousand years. In fact, that has more historic buildings than any other province in China. The main industry in Shanshi is coal mining, so it sounds like a really unlikely spot for a billionaire tech entrepreneur to emerge, but that's kind of what happened. Jahuiting studied finance and administration while he was in school, and at twenty two years old, he got a job working tech support for the province's

tax office. But he wasn't there for a year before he quit his job to found his own technical consultant company, and he became something of a serial business startup guy. As then he founded a lot of companies, and all this stuff gets really complicated and intertwined with one another, which is one of the running themes and running problems of this story. I'll try to stick with one company as much as I can for the sake of simplicity before switching to another, but as you'll learn, there's some

crossover going on here that makes things really messy. However, let's talk about his first company. It was two thousand two and Jiah formed a wireless telecommunications company called Sinotel Technologies. It's a bit challenging to pull up a lot of really detailed information about companies in China, but from what I can gather, the company started off as being a handset distributor, so essentially it was in the retail business of selling phones that were made by other companies in

the Chinese market. This business evolved significantly. In two thousand six, cin Hotel formed a subsidiary company called x Bel Union Communication Company Limited, which was a wholesale distributor for electronic parts and systems for telecommunications companies. So now his clients weren't just you know, the average citizen, but actual telecommunications

companies themselves. By two thousand and eight, the company's main business was quote the provision of network infrastructure solutions to tell cos, which involved the design, installation, and enhancement of indoor and outdoor wireless coverage so as to provide or enhance wireless signals for mobile users end quote. Now to me, that sounds like the company was helping big telecommunications companies in China build out infrastructure like cell towers and signal boosters,

but I could be wrong about that. In two thousand and seven, the Singapore Stock Exchange began listing Sin Hotel Technologies on that market, and it would trade at a few cents per share for years until fifteen, when Jah and his sister in law gen Wrong offered to buy outstanding shares at nine point eight Singapore cents per share in an effort to take the company off the public market and return it to being a privately owned company.

Ja hinted at this possible ability in the two thousand fourteen annual report for Sin Hotel, and that report stated that CINATEL had been facing a few challenging years in a row. According to Jah's letters to shareholders, CINATEL was seeing lower revenues, resulting in a net loss for the company. His explanation was that the Chinese telecommunications companies were cutting back on costs, so CINATEL was making fewer sales because

telecommunications companies weren't budgeting for their services anymore. And in addition, Jah said that the telecommunications companies weren't really great at keeping up with payments or as he said quote in addition, we experienced a longer collection cycle as our tel co customers delayed payment due to their internal restructuring process end quote so it wasn't looking so hot. So what was up with the move to take the company private? Again,

we frequently focus on private companies going public. Going public can raise an enormous amount of money for a company, but it comes with its own costs. Being publicly traded means having to follow more regulations and meet expectations of financial analysts. It also means having to disclose stuff such as revenue, costs, profit or loss. And if your goal is to get some bigger company to swoop in and acquire your company, that is way easier to do with

a privately held organization than a publicly traded one. In this case, Jaw was also facing another tough reality. Sinotel shares had lost value for three straight years. The Singapore Exchange put the company on a watch list, meaning that it was actually in danger of being delisted from the market, which would also be a huge blow. All right, so I'm gonna switch gears for now, but Cinateel will pop

up again. Before we get to the end of this episode, I want to talk about another company that Jaw founded in two thousand four, so two years after he founded Cinateel. This one was called Leshai Internet Information and Technology a k A. L t V l E t V. This company would be the one that would turn Jaw into a billionaire, though then itself is something I'm going to have to explain more a bit later because it's complicated. The early core business of lead TV was streaming video.

Three years before Netflix would offer a streaming video platform, Jaw was doing it with Lee TV. The service partnered with Chinese film and television companies, and in time job would launch a sister company called le Shai Holding Beijing as the source for media that would then publish over at Lee TV. So, in other words, he started making original series and films very much the way Netflix would

later on. The service has multiple ways for customers to watch content, so there are subscription models like Netflix, but there are also add supported versions kind of like Hulu, and there are pay per view options. For the first few years, it was hard to get customers. According to the Verge, it quote wasn't particularly popular in China for most of its existence end quote. But when that popularity

did take off, things really started to get hectic. Exactly when that happened is still kind of beyond me, as finding information about Chinese companies here in the US is really really tricky, and many of the sources I found

didn't always seem entirely reliable. So rather than include something that's just you know, poorly sourced or wrong, I'm just gonna say I don't know when it really took off, but certainly by fourteen, the same year when CINATEL was in big danger, Jah had reached billionaire status thanks to Lee TV. Jah had ambitions of heading up an entire

conglomerate worth of businesses. When Lea TV began to perform well, he began looking at ways to expand in to other tech fields like smartphones and smart TVs and eventually cars Leshi Internet Information and Technology would hold its I p O on the Chinese stock Market in and spoiler alert, last year, the Chinese Stock market delisted the company as well. Learn things have just not gone so well for all

these organizations over the last few years. Jaw's vision was that he was going to create an empire, or more accurately, an entire ecosystem. The goal was to control the hardware, the software, and the content, making a sort of one stop shop for all your tech needs. And so he formed a brand called Lee Echo with the Echo standing for ecosystem or ecosystem if you prefer. The parts of that ecosystem included smartphones, TV, electric vehicles, sports content in general,

online finance, and cloud or internet tech chnology. Now, depending on which source you're looking at, Lee Echo became the all encompassing brand name, or it existed kind of side by side with other Jia enterprises. It's a bit hard to suss out. And making this even more difficult is the fact that sometimes one of jaws companies would purchase a division from a different one of his companies. So, for example, sin Hotel Technologies had as a subsidiary a

company that was called x Bell Investment. The purchasing party of that particular division was drumroll please, Lee Echo. Now.

That happened in when Sinotel Technologies was going through that rough patch of consecutive annual losses that I talked about earlier, and so part of the way Jaw offset the enormous amount of money that the company was hemorrhaging at the time was to sell off a subsidiary to one of his other companies, to bring in some cash and shift the money around a bit, and most importantly, to maintained control of that subsidiary, just under a different corporate structure.

And this kind of illustrates how things are a bit wild west way out east. We have to remember that prior to nineteen seventy six, China's economy was entirely dominated by state run enterprises. As China was and is a communist country where the state owns the means of production.

But maud Ze Dong, the chairman of the Communist Party, died in nineteen seventy six, and since that time the country has gradually embraced some aspects of capitalism, with a sort of uneasy relationship between the government and private enterprise.

Many companies are largely or entirely owned by the government, and since the Chinese government has taken a more hands on approach in private enterprise within the country, probably because of a healthy fear that without direct control, these companies could get powerful enough to challenge government authority. And I

can't imagine where they got that idea anyway. The reason I mentioned that is the financial industry in China is a bit more loosey goosey than in western nations, and part of that is because of the tenuous balance between capitalism and communism. This fragile arrangement includes how companies raise money from investors and secure loans, and all of that will be really important for the rest of our story.

So after we take a break, I'll talk more about the Chinese stock market, because that's going to play a pivotal role in how jaws fortunes have fared over the years. And I'll talk about jazz companies and how they became something like a shell game with Jaw attempting to keep all the shells moving to hide the fact that you know,

none of them actually had a p underneath them. If you don't know what I'm talking about, the classic shell game is when you have like three nutshells and a single dried p and you put the P under one of the nutshells, and you shuffle them around a bit, and you ask your mark to pick which of the nutshells has the P under it. Except you ditch the

p ages ago you're no sucker. That's what marks are for. Well, when we come back, I'll talk a bit about how Jaws companies were kind of doing this, whether intentionally or otherwise, and how Faraday Future comes into the picture. But first let's take a quick break. I mentioned a bit before the break that I would explain about how Jacques became

a billionaire and how it's complicated. Well, the reason it's complicated is because a lot of jaws wealth is tied up with his stock ownership of his various companies, like how much of the companies he personally owns, which means the amount of wealth he has depends in large part on the value of those companies and by extension, the stocks of those companies. So let's talk about the Chinese

stock markets. The Shanghai Stock Exchange traces its history to the nineteenth century, but that history also has a big old gap in the middle. After the Communist Revolution in China in nine, the stock exchange went by by for about four decades. It would reopen in along with it came a new stock exchange called the Shenjen Security Exchange. Alright, so we all know about the stock market, I'm guessing,

but let's kind of go over some basics. We know that you can buy shares or stocks in the company, and that these stocks ostensibly reflect the value of that company. But let's dive into that a little bit further. So a share is, when you get down to it, a piece of ownership of a company. So if a company were to issue one hundred shares and those shares represented one of the ownership of the company, and then you bought one of those shares, you would own one percent

of that company. If you had bought ten shares, you would own ten percent of that company, and so on. When the company makes a profit, it distributes that profit among shareholders, and it could do so in cash, which means you would get a payment equivalent to your percentage of ownership of the company. So if you owned one percent of the company and the company generated a profit of one thousand dollars that it was going to distribute to its shareholders, boom, you would get a ten dollar

check and you keep the stock. So as long as the company is making a profit, so do you. Another way that companies can pay out profits is in share dividends. This is when a company, instead of sending out cash, pays its investors with additional shares of stock. So let's say you had ten shares in the company and you get a ten percent dividend because the company has hit a profit. Then the company pays it out and shares. Now you've got eleven shares. You get an additional share

because of that dividend. A company might do this in order to keep more of its own cash on hand, so it's giving you extra ownership of the company rather than you know, doling out cash. But this also comes with the danger of diluting the stock. There are a couple of other methods for distributing profits, but that's enough for us right now. The stock price itself is supposed

to reflect the value of the company. Hypothetically, it reflects the amount of money we expect that company to make in profits over a given amount of time, and the more likely the company is going to rake in profits, generally speaking, the higher the share price, or the more shares of stock the company will issue. One way to keep stock price down so that the average person can still invest is to issue more stocks. Because the value

of the company is supposed to remain the same. You can't double the value of a company by doubling the number of stocks out there. Instead, if you double the number of stocks, then the price of individual stocks will be cut in half, so that the value of the company and being preserved. This is a very very basic

way of explaining this. So if you take the number of stocks that a company has issued out, and you take the price per individual share of stock, and you multiply those together, you get yourself a rough estimate of the value of a company. But here's the thing. This doesn't always match up with reality. For example, the recent Game Stop story comes to mind. The stock price has

been all over the place. It was around twenty dollars before the Wall Street Mets crowd really jumped on it, and then it hit around five hundred dollars per share at its peak. But as I record this, the price is now around sixty four dollars per share, and that's a pretty wild ride. And obviously we all know the Game Stops value has not changed that dramatically that quickly.

That would be impossible unless Game Stops executives were to say, hey, it turns out the land we purchased, complete with mineral rights, is sitting on top of a literal gold mine, and then later said, also, it turns out that any percent of that gold has disappeared. So while a stocks price is supposed to reflect the value of a company, sometimes it's more accurate to say that it reflects the perception of a company's value, which is something that can change quickly.

The actual company value when you really get down to it, doesn't change that fast, but our perception of it can change very quickly. So if enough people jump on that bandwagon, it can boost the stock performance even more and you've got yourself speculation going on. That's when investors aren't necessarily so much interested in investing in a company long term

because they believe in it. They're more interested in kind of placing a bet that they're going to get a big payoff by buying stocks low and selling them high, because that's the other way you make money from stocks.

You can make money by holding onto stocks and just collecting dividends, or you can make money by selling off shares of stock that you will own if you got in when a company is doing really well and the share prices have grown, or your number of shares has increased dramatically, or better yet both, then you can cash

out and pocket the profits. Now, the reason I explain all of this to you is because we have to remember the stock exchanges in China were very young when Jah was making these companies, and the opportunities to invest in stuff in China and to profit from it were rare before that. Happened. Investment represented a way of getting ahead, something that otherwise wasn't much of an option in China. In two thousand eight, the entire world was plunged into

an economic recession. Now, don't worry, I'm not going to go into all the reasons why that happened. But China was no exception, and there was a bit of a reckoning in the Chinese stock market. And one of the things that Chinese government did was to take a very bold approach to promoting the stock market. So the idea here was that China as a nation would benefit from a robust stock market. So the messaging wasn't really, hey, invest in the stock market and make money and improve

your situation, which is a much more kind of individualized approach. Now, the message from the Chinese government was, let us push China to glory by investing in these companies, which will elevate us all and push China to its rightful place

in world powers. Kind of a more patriotic perspective and one that reflected the communist philosophies, which is not necessarily a bad thing, mind you, but it's very different from how we perceived stuff like the stock market here in the West, where it tends to be more about specific companies and increasing the wealth of investors. The messaging was going out to the entire population of China, and so the Chinese stock markets saw a flood of new investments,

mostly coming from individual investors. Now that's in contrast with most other stock markets, where the individual investors represent a more modest percentage of the overall trades on the market. Most of the trading is going between big investment companies dealing in thousands or millions of transactions. In China, the

drive was overwhelmingly coming from the common Chinese citizen. But many of those investors didn't have very much savvy when it comes to analyzing a company's value and making good investment decisions, and so there was a trend for well trends in which investors would jump on bandwagons for certain companies.

The increased buying activity would push stock market prices up, which encouraged more people to jump on board under the perception that these companies were skyrocketing and value and there was a general move toward over valuing companies. So it was pushing the stock price to the point where the market valuation of a company was much higher than the

company's actual value. So let's say you're someone like Job who owns a large percentage of shares in various companies that you have founded and you currently run, and as that stock price goes up, the value of all those shares increases and you become a billionaire, at least on paper. Now, your assets are not liquid, meaning you don't actually have all that cash on hand to you know, buy stuff.

But your wealth, as represented in the ownership you have in these companies that are doing well in the stock market, is real, and you might make some pretty extravagant purchases for yourself. But the question is, then how do you make these extravagant purchases if you don't actually have all that cash on hand. Well, one way to do that is to secure loans against the wealth that you have

on paper that collateral. So you go to a financial institution and you say, I want to borrow X million dollars, and because I own X million shares of stock, you know I'm good for it plus interest, And the financial institution says, yes, Mr Jah, let me sign the check. I think you can see where I'm going here, Because

the same is true for big businesses in China. The businesses with their overinflated values would secure loans in order to expand operations, and there was a real danger that these companies would over extend themselves and when it came time to pay back the loans, they would be in trouble. That right there is called foreshadowing. But I want to cover a couple of other points about the Chinese market. First.

One regulatory body that China has is called the Chinese Security Regulatory Commission or c s r C, which in began to ease up on restricting certain market practices, both of which are acceptable but can also get out of control. And one of those is called trading on margins or buying on margin, which is where you borrow money in order to buy shares, and if the shares go up, you can sell them off or you know, earn dividends, and then you pay off the loan you took out

while keeping anything extra over the loan plus interest. So let's say a stock costs ten dollars, but you only have one dollar, so you put your one dollar in a margin account as collateral, and you get a loan for ten bucks. Then you use the loan ten dollars to buy your stock, while your one dollar, that's your money,

sits in that margin account. And let's say that the stock price doubles to twenty dollars and you decide to cash out, So you go back and you pay off your loan plus interest, and you get your one dollar collateral back, so you keep whatever is left after you've

paid off the loan plus interest. So let's say that it was just a dollar and interest, so you had to pay back eleven dollars, and you've got to keep nine dollars from the increased stock price plus the one dollar you had in collateral, so you just made nine bucks. But if the stock price were to go down, well, now you have that ten dollar loan to pay off us. The financial institution has your original one dollar in collateral,

and that's their's, and now you're in debt. Yikes. The other practice the c s r C began to allow in twosen was short selling, which I've talked about a lot with the Game Stop story, but essentially, this is when you bet that a stock price is going to go down, not up, so you borrow shares that are not yours there from some other investor and you sell those borrowed shares at whatever the current market price is, and you wait, though how long you wait depends upon

the nature of the loaned shares and the agreement there, and you watch for the price to go down. Now, at some point, you've got to buy back those borrowed shares because you have to return them. They're not yours. You have to return the shares to the person you borrowed from, and hopefully the stock price will have gone down, which means you're buying back the shares for less money than you sold them for and you get to pocket

that there. Friends, So if you sold a borrowed share at ten dollars and you bought it back when it was at five dollars, you would have earned five bucks, and you would return the borrowed share to the investor you took it from. Now, there's nothing inherently wrong with short selling, though it does sound like you're rooting for a company to do poorly. Sometimes it's just that a company is doing poorly and you have the chance to make some money off of that. But market pressures can

make the challenges that corporations face way worse. So let's say a company stumbles a little bit, and there's a big rush to short sell, and that snowballs and makes the share price go even lower, or, as is the case here in the West, you've got these big influential hedge funds that may attempt to game the system a little bit to push stock prices down in order to benefit wealthy investors at the cost of the company and the company's employees. Short Selling can be a legit strategy,

but it can also be harmful. But then again, so can speculation, which is on the flip side of the coin. Anyway, the Chinese market was incredibly volatile, with people short selling and a lot more buying on margin, and all the elements were there for a major catastrophe, which came to a head in the summer of when the Chinese stock market bubble burst. For months, stock market volatility was even more pronounced in China, and companies saw massive losses. Among

them were companies like Jaws. And it couldn't have come at a worse time. I'll explain more after we take this break, all right, So we know that jaws ambitions included creating an entire ecosystem of products that would have

heavy integration with one another. To do that, his companies needed to expand beyond their core businesses, and that meant securing very loans against Jah's own wealth and the well doing of those companies in order to either acquire other companies that were in those businesses or otherwise build out facilities so that Jah's own company could do it. And the Lee Echo brand would extend to all sorts of products, including phones and televisions, and these were real products. It

wasn't just ambition. It's not like Jaw was running a scam or anything. He really was trying to do what he wanted to do, and the company was selling stuff, just not in huge numbers. So, for example, in Lee Echo sold three million televisions, which does sound like a big number, but the more established Chinese TV companies were selling twice as many as that, And when you consider the population size of China, you also realized that three

million is really a drop in the bucket. That expansion of his companies trying to do way more stuff wasn't just the suite of products that Jia wanted to produce, but also extended beyond the borders of China itself. One market the company got into was India, In early lee Echo entered the Indian smartphone market, launching five super phones, which is what the company calls smartphones, and also some smart TVs with the promise of content streams and other services.

As part of this aggressive marketing strategy to disrupt the established smartphone market in India, the company was selling these products either at cost or maybe even at a loss, the idea being that while lee Echo would take a hit on hardware sales, the company would make up for that with service subscriptions, which isn't that different from how

companies like Microsoft and Sony will sell game consoles. They sell them more or less at cost, so they're not making the money off the hardware because the real money is in the games or software side of things. The company and now it would build out a seven million dollar manufacturing facility in India with the goal of producing

two hundred thousand smartphones per month. But lie Echo was trying to do this in India before the country had really established a content infrastructure and culture there, so the paid content model wasn't really established in India in general. That means that the company wasn't really making any money in India yet, and it really needed to hold out for the long game for things to turn around to establish this paid for content kind of culture, and there

was no guarantee that that was ever going to happen. Meanwhile, the financial crisis back in China was putting a real squeeze on Lie Echo, and so in one year after getting into India, Lee Echo largely pulled the plug, laying off more than eighty percent of all employees in India. While he was trying to muscle into the Indian market, Jiah was also taking aim at America. So all these areas kind of take place in the two thousand fourteen

to two thousand eighteen time frame. The official entry into India was around two thousand sixteen to two thousand seventeen. Aiming at America would begin around in a more secuitous

way in sixteen, in a more direct path. So I'm going to start with the direct path first, even though that happened later in sixteen, Lee Echo announced it would acquire the company Video, which is the largest of the United States based television manufacturers, and it was going to do so for the princely sum of two billion dollars.

This would let Lee Echo get into the American TV market without having to establish its own relationships with retailers and with forming a manufacturing center, and all of that sounds like a fairly solid idea. Only one problem. The fact that lie Echo was falling apart back in China from an economic standpoint meant that it really didn't have the cash to throw around for an acquisition like this.

Jacques had secured so many loans based on his personal ownership of Lee Echo stock and had really overextended way too far, and it became clear that the two billion dollar acquisition deal just wasn't viable. In a year after the company's had announced this deal, it all fell apart

and Visio wasn't acquired after all. Video sued Lee Echo for sixty million dollars in damages as a result, and among the charges was one that stated that Lee Echo executives knew about their company's finances and how they were in severe trouble when they first proposed the acquisition, meaning that the executives were trying to lay railroad track down after the train had already been derailed. That case would ultimately get settled out of court in ten and the

terms of the settlement remained private. Oh and then Visio went to court again in twenty nineteen, claiming that Lee Echo violated the terms of that settlement, although the terms themselves still remain private, and Physio sought out a judgment against Lee Echo, but not against Jiah for reasons that will become clear shortly. Okay, but what about that circuitous route that I mentioned that happened in Well, this is what finally brings us to Faraday Future, that car company

that showed off the concept car I saw on. The company operated in stealth mode for about a year and in began to release little teasers of videos that seemed to indicate it was positioned to be a Tesla killer, taking aim at the other upstart electric car company marketing

you know, fancy electric vehicles to customers. Also fund with Tesla and Faraday if you happen to know the origins of those names, and another fund side note, Tesla didn't post an annual operating profit until January twenty twenty, and that was operating profit. That's not the same as annual profit after due factor and all the other opponents. So my point here is that Tesla, a company that launched in two thousand three, went nearly two decades before having

a year that posted an operating profit. So it's a steep klimb, is what I'm saying. Anyway, in Nick Sampson, who had formerly worked as an engineer for Lotus for ten years and then at Tesla for two co founded a new car company that being Faraday Future. The other co founders were Tony Knie, who was an executive with Lotus China before becoming a senior vice president of Lee TV and heading up efforts to develop the electric vehicles over in that company, and then Ja Hua Ting, who

was funding the whole thing back in China. Lee Echo in the form of Lee TV, had already started exploring electric vehicles, including autonomous vehicles the Lee c Pro car that's l E capital S capital E capital e uh. That one made a cameo or was supposed to in Transformers five. In fact, when Jah wanted to unveil the Leasy pro at a special event in San Francisco, and he wasn't able to do it because the company really only had two of the vehicles made at that point.

One was in London about to try and star and Transformers five, and the other one got damaged on its way to San Francisco. So it's somewhat confusing that jab who was showing off the LEAs pro in, was also bankrolling another electric vehicle company in the form of Faraday Future, and that an executive from Lead TV was one of the other co founders of Faraday Future. It was almost like he was entering a market to compete against another

company he was already in charge of. Like it's weird man, And I'm not even touching the fact that he also invested in another electric car company and reportedly started to make decisions that were harmful against that company in an effort to not have it compete against his companies. That's a whole other can of worms. But the two companies would make things even more weird. Patent applications for Faraday Future technologies included illustrations that had Lee Echo logo designs

incorporated in them. While the companies admitted that there was an agreement to share i P between the two entities, they maintained that they were totally separate companies, or sometimes that they were two companies in a very tight aligned strategic partnership. The communication was muddled and it raised a lot of questions, and along with those questions were some about Jia's role. Officially, he was nothing more than a major investor bank rolling Faraday Future and Americans startup looking

to disrupt the automotive industry. But former Faraday Future employees would speak to the press, almost always anonymously, to reveal that Jah was much more hands on with the company than anyone would admit in public. Before its debut at c e S, the company had already announced plans to open up a one billion dollar manufacturing facility in Las Vegas, Nevada.

By July, those plans were scuttled because by then Jah was in some pretty serious hot water back in China, and he wasn't doing so great in the United States either. Lee Echo had purchased a large amount of land from Yahoo in June two thousand sixteen for two hundred fifty million dollars as part of this overall strategy to have Lee Echo and Faraday Future kind of share resources. But less than a year later the company had to sell off all that land as the financial struggles back in

China were really coming to a head. Lee Echo sold the real estate to a different Chinese company for two hundred sixty million dollars, so hey, at least they sold it for more than they bought it. Though when you factor in all the costs associated with owning that much land in Santa Claric, California for that amount of time, I think they probably didn't net much of a profit. In the end, they may have just broken even. But

what the heck was going on back in China? So remember I said Jaw was bankrolling Faraday Future and all these expansions for his other companies, and how he was doing that by taking out loans against his considerable stake in those companies. Well, the loans had come due and the Chinese stock market had dealt a pretty big blow to Jah's own wealth, and Jaw did something fairly radical.

He didn't pay back the loans. The Chinese government was demanding that he returned to China to pay off the various loans he had taken out, and Jiah's response was eventually to step down as CEO of the Lee Echo companies in the Chinese government ordered all his assets in

China frozen. Jaw relocated to the United States, with his explanation amounting to there at a future needs me, and he became CEO of the company in two seventeen and sold off most of his shares to a company called ever Grand Group, which is a Chinese real estate company, but he stayed on as CEO of Faraday Future and retained a good percentage like thirty of the company. Meanwhile, the creditors in China were demanding he returned home to face the music. The House of Cards was falling down,

Lee Echo was hitting a low point. Lee TV was shown to be stagnating as well. Faraday Futures was struggling. Jaw was on a debt blacklist back in China. At one point he sent his wife and his brother I believe, to China to try and settle debt issues because he wasn't going to go in person, which didn't reflect well on him, and as I understand it, his wife subsequently filed for divorce. Though I cannot say that that particular decision was, you know, pivoting on this, this choice to

send her to China instead of him self. I don't know the details for it. He is pretty private about his personal life, so I don't know what all that is about. Fairy Future was not faring any better. Allegations from partners ranged from charges of wrongful termination to failure

to payback debts. One case came from Miles Bernal, who said he was hired to manage some very expensive mansions that were bought through a shell company called ocean View Drive, which was owned by you guessed it or du Jah. He said that he was wrongfully terminated by the company and that he witnessed many cases of Jahn and his team co mingling finances from Faraday, from ocean View Drive and from other sources, as well as making use of

company assets for personal reasons and more. Again, those are his allegations. Meanwhile, Faraday Future was losing top talent, including people who are brought on board to try and wrestle the company's financials into something a little more straightforward and transparent.

Stefan Krauss, who came from BMW, would serve as the chief financial officer for a relatively short while, but he found it impossible to do his job because Jaw wasn't listening to his advice, so Krauss left the company in twenty seventeen, though Faraday Future would say that he had actually been fired from the company. So it all depends upon whose point perspective you believe, and according to a lot of journals and magazines. It was only ever grants

two billion dollar investment that kept Faraday Future afloat. But job messed that up too, because, according to the Verge, jab prematurely spent eight hundred million dollars of that two billion dollar investment. As soon as he received the eight hundred million dollar installment, ever Grand then said, jah, dude, you gotta knock that stuff off. We won't give you the rest of this investment unless you agree to distance

yourself from Faraday Future. And then in the two parties, jaw and ever Grand would argue over which of them was violating their agreement the most. It was bad enough that Nick Sampson himself resigned in October, which must have hurt because he was one of the co founders after all. He sent a letter to employees that the company was quote effectively insolvent end quote which must have hurt even more. The company was laying off our furloughing employees quickly as

corporate resources dwindled. Evergrand and Faraday eventually settled their differences, but it meant that Evergrand drastically reduced its investment, didn't give over any more of the two billion dollars, and it reduced the amount of stake that it agreed to take in the company. Faraday began to sell off assets to try and keep above water, including their company headquarters. With the thousands of employees now reduced to just a few hundred of them, and investors now wherey of Jaw

at long last, weren't eager to help bail him out. Ultimately, the company entered into a restructuring plan, and Jaw formed a trust with the purpose of paying off those debts. So his Faraday Future assets were placed within this trust, the idea being that the trust would oversee the repayment of loans. But his past mistakes were really catching up and various courts were freezing his assets because of his failure to pay, so he had less to leverage in

an effort to repay his debts. Jaw was effectively forced to resign as CEO of Faraday Future. He was replaced by Carston Breitfeld. Jaw still owns a massive amount of stock, but he no longer leads the company, at least not in name, and in October two thousand, nineteen, Jab filed

for personal Chapter eleven bankruptcy. The bankrupt billionaire. See by that time, he had a massed about three point six billion dollars in debt in China, and as I mentioned earlier, his wealth is mostly tied up with shares in various companies that had taken a pretty massive hidden value, and a lot of those assets were frozen by various governments

around the world, and he wasn't swimming in cash. In other words, Jaw's argument was that he really needed his creditors to give him some slack so that Faraday Future could hold an I p O and go public, at which time Jaw's steak and Faraday would give him the money he would need to pay off his creditors. But if the creditors didn't let him do that, he would be forced to liquidate all his assets and pay pennies on the dollar, giving each creditor far less than what

he actually owed them. In late January twenty one, Faraday Future announced a plan to go public through a merger with Property Solutions Acquisition and sp a C or special purpose acquisition company. I mentioned these in an earlier episode of Tech Stuff, But it's a company that exists solely for the purpose of buying out a private company to take it public so that the private company doesn't actually have to go through the I P O process, which sounds shady on the surface of it, but it is

totally legit. And considering how fair day futures prospects have been entangled with jaws financial problems, it might be the only way to get fair day future as a publicly traded company. And it could also mean that jaws shares in the company will be good and he can follow through on his promise to pay back creditors since all his stake is essentially held in trust for that purpose.

And so here we are. I had started to research this more as a story about Faraday Future, which I think I might still do at some point, maybe a year down the road, to kind of see how this shift to being a public company will go for a Faraday. But as I learned more about jaws background, I became

fascinated and wanted to dive more into that. I think there are a lot of lessons to be learned here, including how fast trends and stock markets can have disastrous consequences not just for individual investors, but also for business leaders. Jaw never would have found himself in a predicament that he was in if if it hadn't been for such rapid inflation and the value of the companies he founded.

Though it's kind of hard to feel badly for a billionaire who allegedly spent most of his time in huge mansions in California while avoiding creditors, But just to be entirely fair, it's a remarkable thing to be a business leader and to see your business explode in value, and it would take a very level head and a pretty stable financial environment to be able to, you know, to

navigate those waters responsibly. And I think that the various situations in China just meant that that was exceedingly hard to do. So I don't know job personally. I don't know, you know, whether or not his decisions were all made on good faith. It seems like a lot of the earlier ones certainly were. I don't know for sure. That's just the impression I get, but it definitely turned into

a big message. Actually, the more I was researching this, the more I was like, I feel like investors don't really do a lot of homework before they start pouring billions of dollars of investment into things, and that in itself is a big problem. But that wraps up this story of that particular entrepreneur. I'm sure we will follow up on his adventures in the future, but I wanted to kind of cover someone who was, you know, a complete mystery to me before I started researching this episode.

And if you guys have suggestions for future topics I should cover on tech stuff, whether it's a person in tech, a company, a trend, a specific technology and how it works. Let me know the best way to do that is over on Twitter. The handle I use is text stuff HS double and I'll talk to you again really soon. Tex Stuff is an I Heart Radio production. For more podcasts from my Heart Radio, visit the I Heart Radio app, Apple Podcasts, or wherever you listen to your favorite shows. H