Morning Brew Daily - Big day for business fraud, Jamie Dimon's bank warning, Billionaire Trivia

Episode Date: April 5, 2023

Episode 32: Neal and Toby explain the business fraud charges against Donald Trump, and why they are felonies. They also discuss a former startup founder of a college financial planning site being charged with... Fraud. Plus, Jamie Dimon's warning of a possible banking crisis and if we should take those words to heart. And Google is eliminating some of their employee perks. Meanwhile a professional women's soccer team is coming to San Fran! And Neal hits Toby with some billionaire trivia, how many can you get? Learn more about our sponsor, Grasshopper: https://www.grasshopper.bank/thedailyshow Learn more about our sponsor, TaxAct: https://www.taxact.com Listen Here: https://link.chtbl.com/MBD Watch Here: https://www.youtube.com/@MorningBrewDailyShow Learn more about your ad choices. Visit megaphone.fm/adchoices

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slash brew AI. That's pwc.com slash us slash brew AI. Good morning brew daily show. I am Neil Fryman. And I'm Toby Howell. All right. So I get this text from Toby yesterday. It's 5.30. We're about to take our

podcast field trip to the Yankees Phillies game. I get this text. I open it up. Yo, I'm running to game. Could you possibly bring an extra jacket with you that I can wear when I arrive? And for other people, this might not be seem a little confusing, but yeah, I know Toby, and it means he was literally

running to the game from lower Manhattan to Yankee Stadium. It was eight miles. It wasn't even that bad, and it was so fun, actually. I ran on one avenue the whole way, and I got to see, like, the neighborhoods change as I went through it. It's a great way to see New York, just running the whole island. I just wonder how many people have ever run to Yankee Stadium. Maybe single digits. I was literally sweating, walking through the crowd, Everyone is just like getting hammered and drunk. And I was like, it was an interesting experience for sure. But you also picked up this beautiful Yankees hat.

Yeah, I know. I'm wearing it. We're a hat pod. My first hat pod, yeah, it's exciting. Let's figure out what we're going to talk about in this show. A couple of things. Jamie Diamond gives his thoughts on the banking crisis. He's the JP Morgan CEO.

Women's soccer scores a landmark investment. We'll talk about what that was. and I am going to quiz Toby on billionaires. Oh, boy. I wish it was about myself in that list, but it is not yet. We're working on that. Yet. But first, yesterday, Donald Trump became the first former president to appear as a criminal

defendant in a U.S. courtroom. He was arraigned over his indictment last week, and the charges, which were until now kept under wraps, were released. He pleaded not guilty to all 34 felony counts against him. this is a very complex white-collar criminal case about falsifying business records relating to hush money payments to stormy daniels in order to keep her quiet about an alleged affair with trump so just going to want to break it down here's what prosecutors are saying trump did and why he is a criminal according to them trump's former lawyer michael cohen has come whose name has come up a lot paid daniels a hundred and thirty thousand dollars in 2016 right before the election then in 2017 trump and his company the trump and his company the trump organization reimbursed Cohen. But when they did that, they disguised those Cohen payments as legal fees for services performed that year. And Manhattan Attorney General Alvin Bragg, who brought this case,

says that was false and illegal. Like, you can't do that. You're messing with your books. All right, so we've got that down. But in order for this business record falsification to be a felony instead of a slap on the wrist misdemeanor, Bragg has to show that Trump falsified those records in order to conceal or commit another crime. Bragg says those famed's violated campaign finance laws, but didn't mention any particular specifics. So that in a nutshell is the case that prosecutors think they can bring on Trump. I feel like I'm on law and order right now. We just got the case broken down. Yeah, Neil, the word that comes to mind when you hear this case, at least what legal experts

have been saying, is that it is precarious on so many levels. So many things hinge on like little technicalities and untested precedents. One of those technicalities is the statute of limitations in New York. So this case concerns payments that happened between 2016 and 2017, which is more than five years ago, which is the statute of limitations of felonies in New York. And so they need to prove that Trump has spent a continuous period outside of New York, which is a way to suspend that statute of limitations. And there is some argument for that because Trump obviously was president during that time. And he also spent a lot of time in Florida. So this case could be dead in the water, though, if they can't prove that he spent enough time outside of New York for them to suspend

the statute of limitations. Another technicality I was reading about is that, you know, Bragg is trying to charge him under New York state law, but this campaign finance violation that he wants to also get him on is a federal law. And this has never been done before where you kind of charge someone under federal law in the state of New York. The courts just have not come to a decision on that. So that's another reason why Trump's lawyers are going to try to, you know, make that point. And this game, this case could get tossed. So, yeah, Bragg has gone a lot of heat from Republicans, obviously, and some Democrats for bringing the case that's against a former president.

You better have your ducks in order. Right. And this has been a little shaky. How he responded was, I thought, a little interesting, especially for those of us in, in the business news sphere. He said that he was trying to protect the integrity of New York as a finance capital of the world. and you need to have a tight rule system in place around business record keeping so that when

people do business in New York, everything is above water and everybody's trustworthy. But I watched his press conference and the entire time he was like, I've done this a million times before. Like, this is my bread and butter. In New York, prosecutors have filed more than 280 felony counts of falsifying business records since 2019. Yeah, that's a really interesting wrinkle is that they are protecting the integrity of New York as a financial capital.

That's what they claim. Yeah. Right. And so that is something. it does reframe it. People have been obviously putting their own readings on the on the situation, but to brag, it might just be, yeah, another day in the office. He's like, of course I'm going to prosecute. It doesn't matter who it is. Obviously, it might be, it is different at a certain level, because he is a former president. But yeah, that's an interesting wrinkle. One, two other kind of

butterfly effects from this, obviously, is that Trump is profiting. Always be selling. Always be selling. Always be dealmaking. So the two stats I want to bring up are one. His NFT project that he launched back in December was actually jumped 413% in the last few days. That number is a little bit misleading, though, because the total volume is really, really low still. Only like $68,000 worth of NFTs were traded. That's down from the $3 million that was traded back in December and its peak. But still, that headline number of his NFTs jumping 413% is headline-worthy. And then the other thing Trump started doing was obviously started selling T-shirts with his face on it with a fake mugshot of him holding like a prisoner number that says 45 and 47 mentioning that he was the 45th president and wants to be the 47th president.

So it's very easy to predict that Trump was going to find a way to cash in on this in some way. He's a good marketer. Yeah, he really is. And so, yeah, looking ahead, there's all this stuff that's going to happen before. this even goes to trial. Like we mentioned, the Trump's lawyers are going to throw literally everything at the table to try to get this tossed out. If it does go to trial, then it will not happen for a few months, and it could have been right in the thick of the campaign trail. We're going to be talking about this story going forward. We can guarantee that. Okay, Neil,

we're going to go to another case of financial fraud. Big fraudulent morning this morning. But, Neil, we know all about the Kentucky to the NBA pipeline. We all. We all. also know about the Ivy League to consulting pipeline, but today we're talking about the Forbes 30 under 30 to prison pipeline, which is unfortunately a thing. So that's right. Another Forbes 30 under 30 founder has been charged by the DOJ with defrauding JP Morgan Chase for 175 million. This is a wild case. So essentially Charlie Javis is this founder of a fintech firm called Frank, which was marketed at this tool to help parents and students navigate the financial college aid process. They had this massive email list of $4.25 million, which was really tasty for J.P. Morgan, who wanted to snag those emails.

And so they paid $175 million for this supposedly, like, growing and prosperous fintech firm. Well, turns out that was fools gold. J.P. Morgan quickly realized that the majority of those emails were probably fake. and they realized it when they tried to email 400,000 of them, and 70% of the emails bounce back, which, Neela, that's not a good open rate. Not a good open rate. So, yeah, it's just another example of kind of a Forbes 30 Under 30 founder doing something a little naughty.

Maybe. I was looking at Javis' response, just to see what she was saying to this. She basically kind of owned up to falsifying this email list, but also said that J.P. Morgan was in such a race to buy Frank that they kind of pressured her to falsify data as well. So it was kind of interesting because we've seen these big, big banks try to get by scoop up these little fintechs that have access to younger potential customers in the future. And so Javis is saying that there was this race to buy her between all of the big banks and J.P. Morgan was foaming at the mouth.

And Jamie Diamond was like, I need to buy it. Make it look good. So that's her defense. but we'll see what happened there. It's definitely, J.P. Morgan is not without fault in this. Like, come on, do just a little bit diligent. Yeah. And it was interesting, though, to see some of the details.

Again, this is not set in stone yet, but these are some of the details that are coming out, is that Javis paid a data science professor $18,000 to fabricate some of these fake customers. I don't know if that's a good deal for the data scientists or a bad deal. I feel like you... They weren't named in the lawsuit, so... You get paid a little bit...

18,000, though, for... millions of fake addresses. I don't know how easy. You got to raise your rates a little bit, buddy. Also, this is the money quote, basically that, you know, she pressured this, she allegedly pressured one of an employee, an employee to help her allegedly, I'm just saying allegedly five million times this podcast, to have had these numbers and the employee raised legal concerns.

And then she goes, we don't want to end up, we don't want to end up in orange jumpsuits. It's tough that that's on record. Can we end on the Forbes mentioned, though? This is like a classic, come on, man situation. Let's just say that I hope this podcast never gets mentioned in Forbes, because here's just a little bit of what they've done. So, SVB was on their America's Best Banks list for five straight years, including earlier this year. Yes, SBF was on the cover. Adam Newman was on the cover.

Elizabeth Holmes was on the cover. It's a tough crowd to belong to. You don't want to be, yeah, again, you mentioned it. But if our faces ever show up on the cover of Forbes, just runs. Stop listening to the podcast. Distance yourself from us because something's going wrong. All right, moving on. Let's stick with J.P. Morgan.

I am here with some shocking news, Toby. A bank CEO is blaming regulators on the recent banking crisis. Can't believe that. The CEO is J.P. Morgan, Jamie Diamond, who published his closely watched annual shareholders letter yesterday. This was his first public remarks on what happened in the SVB collapse, and he's the CEO of the biggest bank in the country, so everyone's kind of, waiting to hear what he is going to say about it.

So he said that regulators missed risks that were hiding in plain sight and also created rules that encouraged banks to buy up these long-dated treasuries that collapsed in value when the Fed raised interest rates. Yeah. These letters are always so interesting to me because, one, it's a shareholder letter. So on half of it, he has to show that the banks in a great spot, like J.P. Morgan's doing well and has this weird, almost like false optimism. And then it's part like pedestal for him because he knows everyone's.

going to read it. So he kind of pushes forth his agenda. Yeah, he kind of laid into regulators, talked about everything from like, he talked about climate change. He talked about anything he wanted to talk about because he knows he has his platform. So I always enjoy kind of like piece or parsing through what is said in these things. But yeah, he also, he blamed, he got into specifics on SVB and blamed the fact that its deposit base was like so concentrated. He called that the unknown variable that caused all this. But yeah, he did basically say that the banking crisis isn't over. One other thing I thought was interesting is that he, there's this narrative that the banking

crisis really benefited the bigger banks because all these outflows went from the small regional banks to the big banks. But he said, while it is true that this bank crisis benefited in quotes larger banks, the notion that this meltdown was good for them in any way is absurd, which again, he's the CEO of the biggest bank. So I mean, just to end on a positive note, Jamie Diamond also said that, you know, things were generally pretty good. He said that businesses are pretty healthy and credit losses are extremely low.

And he said, it's likely that 20 years from now America's GDP will be more than twice the size it is today. I really hope that is for my stock for Forleo. And then he also took a little inspo from Buffett, who's obviously the most famous shareholder letter writer. And he said, my friend Warren Buffett points out that his company's success is predicated upon the extraordinary conditions our country creates. He is right to say that his shareholders,

that when they see the American flag, they should all say thank you. Oh, my God. We should too. They love a little like Rara American. Love a little Raja. Yeah. Okay, that was a very fraudulent beginning of the show,

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You win? Details at Yamava.com must be 21-20. Please gamble responsibly. Monopoly is a trademark of Hasbro. Hasbro is not a sponsor of this promotion. Okay, Neil, it's time to get out our world's tiniest violins for Google employees and Google. because according to an internal memo sent by the company's CFO, Google is scaling back on some of its world-famous office perks in order to rein in costs and get a little more efficient as it kind of enters this big AI battle with Microsoft. So some of the perks that are on the chopping block, one, it's closing some of its office microkitchens, which is kind of sad for a lot of people. It is trimming its spending on personal laptops. and then it's even cutting back on the number of staplers and tape it orders. So they're really hitting all fronts of the company scaling back.

So this Membo is just one example of what people are calling a perk session going on at big tech firms. Is the buzzword that I actually think is happening? Yeah, for sure. I don't know. This is getting a lot of headlines because Google, it was the goat when it comes to free perks. They symbolize the excesses, the pampering of tech workers. 10 years ago as exemplified by Silicon Valley. I think Silicon Valley on HBO is going to be like a really, like an historical document

about this golden age of tech that we are now leaving. Yeah. No, that show is so good. Yeah. It was so good, but it also exemplified this excess, this venture capital boom pouring into tech companies. These big tech companies were offering every type of perk imaginable. I mean, everyone talked about the nap pods, ping pong tables.

Yeah. But it was also way, that was just. kind of the window dressing, the biggest things were free food. Right. A lot of people, free food is crazy. Yeah, it's awesome a lot. And this wouldn't be a perk session, though, if it was just Google. I will go through some of the other perks that are being cut. So Facebook is cutting its free laundry and dry cleaning services. Did not know that they had that. Unreal. I would love that. So Morning Brew, if you're listening. And then Twilio cut. It's a employing employee allowance for wellness and books. Again, book, I didn't know they had a book.

We have a book one. Oh, all right. Let's go. And then Salesforce got rid of its specialty coffee barrises at its office in San Fran. And it also got rid of its paid wellness day once a month for employees. So I guess you can call this a perk session. Like people are cutting everything. I just remember going to, we were in a we work in the early days of the brew.

And in our we work building was a we work office too, like corporate HQ. I remember going in. It was the most beautiful space I've ever been in. And instead of going to get a coffee. from a curig, you went up to this coffee bar, and there was an actual barista there making espresso drinks. Right. So, Salesforce had that until very recently and just cut it, yeah.

We mentioned in the microchitchens, and I quizzed you before the show. I'm like, how many microchitchens do you think Google has across his offices? And you said, like, 200. It's 1,300 microchitchens, according to a 2019 fast company report. So when you hear those numbers, you're like, oh, my gosh, like, of course you have to close They've become ghost kitchens now. Yeah, literally. And before we go, I just wanted to say, I was just thinking about, like, what can we draw from this?

Is there any deeper insight? And obviously, it symbolizes the labor market cooling for tech workers. They obviously don't think that they need to recruit as many workers as they have in the past, which is quite obvious because they've all been laying off people. They still need high performers to come to the, they're still hiring the best people to come work there on things like AI and maybe high performers are not as motivated by the perks and they're more motivated by the type of work that they're doing. Right. Um, so that, what, that's your philosoph. That's my philosophy. I totally agree. Like the, the, the A plus players are the people,

they don't really care about the perks. Although they did say that the biggest perk is just working remotely still. Yeah. It's like, that's still a thing. So yeah, Friday job report coming out, we'll actually get to see if that is playing out in like the broader macro environment. All I need is good coffee, maybe a few snacks, and I'll be happy. And a window. I like being next to a window. All right. Let's move on.

Women's sports, so hot right now. So hot. So hot. Yesterday, private equity firm's 6th Street Partners committed $125 million to buy a new expansion team for the National Women's Soccer League. The U.S. is top soccer league for women. This was a landmark investment for a couple of reasons. First, it's the first institutional investor to become the majority owner

of a professional U.S. sports franchise. While that's common in other countries, U.S. leagues have typically banned it. Second, it's the biggest institutional investment made in a pro-women's sports team, period. Yeah, it's huge. We're digging into the numbers. They're spending $40 million on a practice facility,

which is going to be really nice. $53 million is going to the expansion fee, which is just a massive increase. The last price that was paid for an expansion fee, $5 million. So this is a $1,000. 10x increase over it. I feel like they got kind of a bad deal honestly. They got jipped a little bit.

The last person paid $5 million, you're paying $53, but yeah, it just goes to show the trajectory that the NWSL and just women's sports in general are on right now. There's a lot of celebrities in this league. A lot of celebrities. Celebrity owners, yeah. Celebrity owners, yeah. Yeah, they're not playing.

Cheryl Sandberg, the former meta-executive, Facebook executive, is joining the board of this new team. There are four former U.S. Women's players that are minority owners. And we have to talk about Angel City FC, which launched a couple years ago, which is a new team. It was led by Natalie Portman, Eva Longoria, Miaham, and Serena Williams, and Serena Williams' husband, Alexis O'Hanion, who co-founded Reddit.

So there's a lot of star power in this league. The big thing that the CEO of 6th Street, who led the investment, said that this was not a, like, a moral or a, actually as Ali Wagner, who's part of the, the ownership group said it's not a heartstring decision or a moral decision, which is what a lot of people looked at women's either correctly or incorrectly for the last couple of years, investment in women's sports. But the 6th Street CEO said that everything indicates something is structurally undervalued when they're looking at investing in this team. So they're truly treating it as an investment that they expect to pay off in the long run because, yeah, the numbers

are there. The eyeballs. People are talking about it. I mean, this week on social media, at least on my social media has been dominated by the Iowa, LSU women's college basketball game. That has had a shelf life of four days. Right. The thing now is that Jill Biden, the first lady, invited. Big mistake here. Big mistake. I'm not a White House press person, but not a great communications thing.

But they, Jill Biden, invited Iowa and LSU to come to the White House, even though Iowa lost. And then the entire state of Louisiana and all of the LSU players are, you know, Just furious. Furious. Yeah. And Angel Reese, one of the players on LSU has also been in this other controversy, said, you know, I don't need you. I'm going to Obama.

That's good right there. Yeah. All right. So we'll keep an eye on that. And very excited for this World Cup that's coming up this summer. Yep. All right. Let's talk finally about the Forbes billionaire list that just came out yesterday.

LVMH founder and CEO Bernard Arnault is at the top, becoming the third person ever behind musk and bezos to reach 200 billion dollars in net worth so to toby we usually go to trivias on wednesday night but we can't tonight uh because of passover and so i've decided to write a little quiz for you uh and i just want you just it's hard okay it's hard i don't expect you to get i've been dreading this but we're not going to think you're dumb just i want it we also want to hear your uh thought process your thought process okay here we go i have four questions with a net worth of $37 billion, Mark Matasich, I think I pronounced that right, has a fortune that's 10 times as big as the second wealthiest young billionaire.

The 30-year-old Austrian inherited his fortune from his mega-billionaire father Dietrich who died last year. What company did Dietrich co-found? Oh, we got some music. We have some Jeopardy rip-off music. Okay, on this one, I actually know, I think I know it because Austrian. You mentioned Austrian. And the only company that's gigantic out of Austria is Red Bull. The drink company. One out of one. I underestimated it. That one was good because you added the Austria tip. We need a bell. All right, you're one out of one. Here we go. Give your best estimate for how many billionaires there are in the world. I'll give you credit for their clothes. In the world.

Okay. I'm going to guess there's probably 300 in the U.S., 200 out. I'm going to say 500 to 500. Not quite. You're underestimating capitalism right there, man. 2,640. 2,600? Yeah. Maybe, oh, is there 500 just in the U.S.?

I guess there's got to be... Boy, more than 500 in the U.S. I think the U.S. has been by the most. Oh, my God. All right, one out of two. Rank the following billionaires by net worth, okay? Zuck, Bill Gates. I should have brought you.

I should have told you to bring in a pen. I know. Zuck, Bill Gates, Bezos, and Buffett. Okay. I know I think Bezos is first still Buffett I think is second now Zuck is third and Bill Gates is fourth

Wow that's Bill Gates slander You were close it was Bezos Buffett Gates and then Zuck Zuck is 16 Oh dang it I thought that oh 16 billion No no no sorry 16th on the list And those other guys are in the top 10

Okay makes sense I thought that Zuck had this like late stage comeback because meta's up like 100% percent this year. Maybe he sold so much of the company to Peter Thiel in the early days. You would think he built a $500 billion company by his own and he's not worth more than, you know, Bill Gates. I don't know, guess Bill Gates and Bezos and Gates did all the same thing. All right. Final question. With a net worth of $80.5 billion, Francois Betancourt Myers is the richest woman in the world. She is the heiress to which French

beauty company? Oh my goodness. Like, I feel like they're all under LVMH at this point. Well, which one isn't? Chanel? No, it's not a luxury company. It's beauty. You see there?

L'Oreale. L'Oreale? L'Oreale. I think I'm... Can we give it to them? Yeah, give it to me. All right, we'll give it to them. I got the horn.

We'll give it to them. This is good. Yeah, not bad. I'll give you 2.5 out of four. That was a lot of fun. Pretty good job. Thank you. Thank you.

Next week, you have to quiz me. Yeah. I guess I underestimated capitalism, though. You're totally right. All right. Before we hit the credits, we have to shout out an absolute king. Clause Tober, Tuber, who died a few days ago. He created the board game Settlers of Catan back in 1995, which has become one of the most beloved games around the world. And Toby and I are also a big fan.

Toby's a big player. I'm very much an amateur settler, but we love settlers of Catan. It's sad, though. He's such a good guy. You know him? Well, no, I just know it because he created the game because he hated his job, which we can all relate to. I mean, not us. We love our jobs. But because he was working in the dental industry and he used it as an escape, he created this island, his own world.

And it's just become one of the most beloved games in the world. Yeah. Yeah, I was thinking we got a Dungeons and Dragons movie. When is Katan? Catan movies coming out. We'll see it. A fight over, or. Yeah.

All right. Now the moment you've all been waiting for the credits. Take us out of Neil. All right. Please email us at morningbrewdaily at morningbrew.com recipes. passover recipes I'm cooking so I need a lot of ideas in the next 12 hours eight hours or anything else you want to say to us shows producer and editor is emily miliron the show's technical director is just in Orlando Evan Frolov welcome to the show

he's the associate producer our supervising producer is Bryce Belloff Dan Bousa is our master of sound hair and makeup got cut along with all of our other perks Devin Emery is our chief content officer our show is a production of morning brew great show today Neil let's run advice tomorrow. Enjoy more ways to save at Ralph's, like low prices in every aisle. And when you download the Ralph's app, you can clip and save more with digital coupons every week. Plus, you can earn fuel points to save up to $1 per gallon at the pump. At Ralph's, you can enjoy more ways to save and more rewards every time you shop. So it's always easy to save big every day with savings

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