5 ms·

what's the argument for it being a scam?

by rtpg 4mo ago

hnav 4mo ago
shady debt offloading onto its sibling financing entity, which is run by Carvana CEO's father, a man convicted of fraud
- maest 4mo ago
  > a man convicted of fraud Most practitioners in the field see that as a very strong signal of future fraud.
  - rubyfan 4mo ago
    At that level they call it financial engineering.
- ChrisMarshallNY 4mo ago
  > financing entity, which is run by … a man convicted of fraud I didn’t think that was allowed.
  - hnav 4mo ago
    Commander in chief got convicted in NY before being re-elected, I think everything's allowed these days.
vannevar 4mo ago
They're an outlier in the industry in terms of profit per car. But they don't actually get revenue from selling cars, their revenue comes from selling car loans. So they're making the additional margin on the financing. They are also famous for not turning down loan applications. So putting the pieces together, it seems like they are selling high risk loans at a healthy profit. Which brings up the question of who is buying those loans. They don't disclose the buyers, but claim that those buyers are not controlled by Carvana or its parent. Given the history of fraud, it's hard to take those claims at face value. The suspicion is that they are selling the loans to family-controlled shell companies and leveraging the stock to finance the scheme.
- infecto 4mo ago
  This is how many businesses operate. You have still not provided example of fraud or scam behavior.
  - vannevar 4mo ago
    If "many businesses" operate this way, then "many businesses" are committing fraud. You can't publicly claim to be selling loans to an unrelated company when in fact you control that company.
    - infecto 4mo ago
      The latter has not been proven and the former is pretty normal for business. We will see how it plays out in the court and markets.
      - vannevar 4mo ago
        The second law of thermodynamics hasn't been proven either, but I'm fairly confident in it. ;-)
        infecto 4mo ago
        Fair enough, but courts tend to apply a slightly higher evidentiary standard than thermodynamics. ;)
  - deleted 4mo ago
    [deleted]
  - jazzpush2 3mo ago
    You don't think the last sentence, if proven to be true, is fraud? Or, at the minimum, an example of scam behavior?

what's the argument for it being a scam?

by rtpg 4mo ago

what's the argument for it being a scam?

hnav 4mo ago

shady debt offloading onto its sibling financing entity, which is run by Carvana CEO's father, a man convicted of fraud

maest 4mo ago
> a man convicted of fraud Most practitioners in the field see that as a very strong signal of future fraud.
- rubyfan 4mo ago
  At that level they call it financial engineering.
ChrisMarshallNY 4mo ago
> financing entity, which is run by … a man convicted of fraud I didn’t think that was allowed.
- hnav 4mo ago
  Commander in chief got convicted in NY before being re-elected, I think everything's allowed these days.

vannevar 4mo ago

They're an outlier in the industry in terms of profit per car. But they don't actually get revenue from selling cars, their revenue comes from selling car loans. So they're making the additional margin on the financing. They are also famous for not turning down loan applications. So putting the pieces together, it seems like they are selling high risk loans at a healthy profit. Which brings up the question of who is buying those loans. They don't disclose the buyers, but claim that those buyers are not controlled by Carvana or its parent. Given the history of fraud, it's hard to take those claims at face value. The suspicion is that they are selling the loans to family-controlled shell companies and leveraging the stock to finance the scheme.

infecto 4mo ago
This is how many businesses operate. You have still not provided example of fraud or scam behavior.
- vannevar 4mo ago
  If "many businesses" operate this way, then "many businesses" are committing fraud. You can't publicly claim to be selling loans to an unrelated company when in fact you control that company.
  - infecto 4mo ago
    The latter has not been proven and the former is pretty normal for business. We will see how it plays out in the court and markets.
    - vannevar 4mo ago
      The second law of thermodynamics hasn't been proven either, but I'm fairly confident in it. ;-)
      - infecto 4mo ago
        Fair enough, but courts tend to apply a slightly higher evidentiary standard than thermodynamics. ;)
- deleted 4mo ago
  [deleted]
- jazzpush2 3mo ago
  You don't think the last sentence, if proven to be true, is fraud? Or, at the minimum, an example of scam behavior?