How the Inventors of Dragon Speech Recognition Technology Lost Everything 606
First time accepted submitter cjsm writes "James and Janet Baker were the inventors of Dragon Systems' speech recognition software, and after years of work, they created a multimillion dollar company. At the height of the tech boom, with investment offers rolling in, they turned to Goldman Sachs for financial advice. For a five million dollar fee, Goldman hooked them up with Lernout & Hauspie, the Belgium speech recognition company. After consultations with Goldman Sachs, the Bakers traded their company for $580 million in Lernout & Hauspie stock. But it turned out Lernout & Hauspie was involved in cooking their books and went bankrupt. Dragon was sold in a bankruptcy auction to Scansoft, and the Bakers lost everything. Goldman and Sachs itself had decided against investing in Lernout & Hauspie two years previous to this because they were lying about their Asian sales. The Bakers are suing for one billion dollars."
Fixed link (Score:4, Informative)
Goldman Sachs and the $580 Million Black Hole [nytimes.com]
Re:Ironic (Score:5, Informative)
Re:Why civil? (Score:5, Informative)
Talk about the ultimate troll move. That surpasses being Rick Rolled.
Re:Ironic (Score:5, Informative)
I thought Goldman Sachs were the good guys?
They are! That's why the Hope & Change President decided to put change on hold and continue the long-standing tradition of stuffing the White House with Goldman alums and associates [firedoglake.com] and sending administration people back [huffingtonpost.com].
Non-Paywalled version (Score:5, Informative)
http://www.nytimes.com/2012/07/15/business/goldman-sachs-and-a-sale-gone-horribly-awry.html?pagewanted=1&_r=2&hpw [nytimes.com]
Re:Trading is not stealing (Score:5, Informative)
They stole money from the taxpayer's treasury. To the tune of $100 per U.S. home.
Re:Why civil? (Score:5, Informative)
Re:there is no wall at goldman sachs (Score:4, Informative)
examples of where Goldman 'analysts' or 'consultants' were wishy washy with the 'trading' folks
I don't think that word means what you think it means, if you think it means "friendly with".
wishy-washy [thefreedictionary.com]
adj Informal
1. lacking in substance, force, colour, etc.
2. watery; thin
Adj. 1. wishy-washy - weak in willpower, courage or vitality
namby-pamby, spineless, gutless
weak - wanting in physical strength; "a weak pillar"
Re:I was working for an L&H competitor at the (Score:2, Informative)
Siri doesn't do its voice recognition on the cellphone. It farms that out to machines in a datacenter somewhere.
Re:Trading is not stealing (Score:4, Informative)
Under American law fraud and theft are different. You describe fraud, and perhaps conspiracy, not theft.
Re:Why civil? (Score:2, Informative)
This isn't about Mitt Romney. Right or wrong, it's a long standing principle in the US.
1 U.S.C. paragraph 1 states:
"In determining the meaning of any Act of Congress, unless the context indicates otherwise-- the words "person" and "whoever" include corporations, companies, associations, firms, partnerships, societies, and joint stock companies, as well as individuals"
"Legal persons" have a lot of the same rights as fleshy persons, except the right to vote (but they have the right to buy votes) and protection from slavery - you can buy and sell them. And some rights that us bloodbags don't have, like never getting prison sentences.
Re:Two lessons here (Score:4, Informative)
Dollars are paper, but their value is not nebulous. If Company A that you know nothing about gives you $10, it has the same value as if Company B gives you $10. Now, if they each give you "$10 worth" of their stock, that value is nebulous.
If you still don't understand, simply work out for yourself, if they had been paid in dollars where they be now and would we be reading about this lawsuit?
Re:Ironic (Score:5, Informative)
Remember that GS was on the smart side of the mortgage trade... even though they were copying what another trader was doing. They knew that the mortgage mess was going to blow up. They sold sh*t funds of mortgages while betting against them. Read William Cohen's "Money and Power: How Goldman Sachs came to rule the world." for more info.
AIG were idiots for selling insurance on investments that the had no business in. GS bought boatloads of insurance against default of investments they didn't have. That is nothing more than gambling and should be taxed as such.
Re:Why civil? (Score:2, Informative)
Re:Ironic (Score:5, Informative)
You fail to mention the current Secretary of the Treasury was deeply involved [wikipedia.org] in those decisions.
Re:Why civil? (Score:5, Informative)
Re:Trading is not stealing (Score:4, Informative)
Fraud is nothing more than a type of theft which involves no violence. Con jobs are thefts.
A con job where the goods are never delivered is theft. If the goods are delivered but are not what was represented, or there is otherwise some trick involved, then it is simply not theft.
I'm not sure why there is this strong desire to attach the word "theft" to fraud, fraud is already as bad as theft. What is gained by inaccuracy?
Gaston Bastiens Anyone? (Score:3, Informative)
Re:Ironic (Score:2, Informative)
Vote?
The Fed wrote checks for ~$630 billion to the banks, [bloomberg.com] regardless of the outcome in Congress.
Re:Why civil? (Score:3, Informative)
Religion is what keeps the poor from murdering the rich. ~ Napoleon Bonaparte
Re:Not stealing if I agree to give you the item (Score:5, Informative)
There are very specific rules regarding investing. If you are acting as an economic adviser to another entity, there is all sorts of legal language attached to that transaction that is supposed to insure that you are acting in the best interests of your client. It's similar to acting on behalf of someone else as their legal representative (in other words, lawyer)
If someone hires you as an adviser for their investments, and you tell them to invest in something that you know is dodgy, then you are in hot water. At the very least, there is the concept of due diligence, where you are supposed to do a through analysis of the investment before recommending it. It appears as though Goldman had done their due diligence before and decided against investing in L&H, which means they are in trouble if they then recommend someone else make a similar investment.
Re:Trading is not stealing (Score:5, Informative)
That kind of stuff happens when you have free markets.
When you have "free markets" Goldman Sachs doesn't get bailed out. You can't have it both ways - blame the free market when cronyism is the real culprit.
Re:Ironic (Score:5, Informative)
That's because they are basically part of the US Gov't. How many "former" GS members have been in presidential cabinet members? Lots and for years. How many members of Congress have come from or moved to GS? Lots. They don't call it the revolving door for nothing. They're inextricably connected.
Re:Ironic (Score:5, Informative)
But the bailout required the relatively unregulated investment banks to become commercial banks, members of FDIC, and accept regulation. The Federal Reserve does act as lender of last resort for commercial banks (who do have to be members of FDIC), but had no authorization to lend money to investment banks. I think that's what he was talking about.
I'm actually working on a project related to this topic. For general info, one can look up every bank, bank holding company, saving and loan company, credit union etc., with any business in the US, at Federal Financial Institutions Examination Council's (FFIEC) [ffiec.gov]. You can see who owns who, who bought who, etc.
The Council is a formal interagency body empowered to prescribe uniform principles, standards, and report forms for the federal examination of financial institutions by the Board of Governors of the Federal Reserve System (FRB), the Federal Deposit Insurance Corporation (FDIC), the National Credit Union Administration (NCUA), the Office of the Comptroller of the Currency (OCC), and the Consumer Financial Protection Bureau (CFPB), and to make recommendations to promote uniformity in the supervision of financial institutions. In 2006, the State Liaison Committee (SLC) was added to the Council as a voting member. The SLC includes representatives from the Conference of State Bank Supervisors (CSBS), the American Council of State Savings Supervisors (ACSSS), and the National Association of State Credit Union Supervisors (NASCUS).
Re:Ironic (Score:4, Informative)
I might add that, as of a month or so ago (last time I checked), the following items were true - from memory, so I I may be a bit off:
1. The US Government spending is now over 40% of the Gross Domestic Product (GDP).
2. 40% of that spending is borrowed money
3. 60% of that borrowing is being lent by the Federal Reserve, as the world's appetite for US government debt is no longer enough to swallow it all.
4. The Federal Reserve is essentially printing money by loaning this imaginary money to the US.
This means that .6*.4*.4 = 9.6% of the GDP is pure inflationary money-printing. (Actually my memory says that the number is more than 12% but I don't know which of the above is incorrect. If 60% of spending is borrowed, rather than 40%, then that would be about right. I'm too lazy to go back and look up the numbers again.)
IOW, our economy is now being inflated at 12% per year (I'm going with the number I recollect). Be prepared to pay a LOT more for goods in the near future. (I would just add that minor items such as the cost of fuel and housing are not included in the Consumer Price Index, and a lot of other factors are fudged. So the CPI is basically imaginary, like the Unemployment numbers, which don't include anyone who has used up their unemployment benefits or just gave up looking.)
Re:Ironic (Score:5, Informative)
And how do you propose people do that? Most people these days are given 401k's as their only retirement option, in which they are forced to pick from a short list of thieves who to trust with their money. You can try to invest for yourself with an IRA, but they'll steal from you all the same with HFT. Or you could try to trust entirely in Social Security, but that's not really enough to live on in many areas, and odds are they will have privatized (i.e. stolen) all of it within 20 years anyway.
Re:Ironic (Score:4, Informative)
Re:They are the good guys (Score:5, Informative)
The corruption is far, far greater ...
http://en.wikipedia.org/wiki/Brad_Birkenfeld [wikipedia.org]
In October 2001, Birkenfeld began working at UBS in Geneva, Switzerland, handling private banking, primarily for clients located in the United States. In 2005, he learned that UBS's secret dealings with American customers violated an agreement the bank had reached with the IRS.
He resigned from UBS in October 2005 and provided written whistleblower complaints to Peter Kurer, Head Counsel for UBS, and other UBS senior executives regarding the illegal practices of U.S. cross-border business.
He is the first person to expose what has become a multi-billion dollar international tax fraud scandal over Swiss private banking. Despite his unprecedented, extensive and voluntary cooperation, and registering as an IRS whistleblower, Birkenfeld is the only U.S. citizen to be sentenced to jail as a result of the scandal.
Re:Ironic (Score:5, Informative)
Your numbers are wrong. For the most recent actual numbers, we can take the 2011 year.
See here for the budget: http://www.gpo.gov/fdsys/search/pagedetails.action?packageId=BUDGET-2011-BUD [gpo.gov] and here for the GDP numbers: https://www.cia.gov/library/publications/the-world-factbook/geos/us.html [cia.gov]
3.8 Trillion of 15 Trillion (roughly) is 25%.
40% of the current spending is deficit spending, but no idea where you get the idea that 60% is just financed by printing money. You need some citations for that. Finally, about 9.8% of the US GDP is deficit spending. That is a scary number - but the alternatives are scarier. And as someone pointed out, your information on the CPI is flat-out wrong.
For some who is making grand plans to influence the future, you are remarkably uninformed.
Re:Ironic (Score:5, Informative)
The official rate is the inflation right now, not the inflation rate from some arbitrary year in the past until now. If you look at those official rates you'll see they were cosniderably higher than 6% around 1980.
1968 - 2012 is 44 years. 8% for 44 years would make that $1800 price be $53,000 now (you clearly used 6% for 40 years and didn't knock of 25%).
You made up your 8% number. 1800 -> 18995 over 40 years is 6.1% inflation. Over the 44 years from 1968 to 2012 it's 5.5% inflation. Whereas offical numbers have the CPI inflation at 4.4% over the last 44 years.
Official numbers have have prices rising by a factor of 6.6 over that time period - oh look inside your "factor of 5 to 10" range for carpenters and software engineer wage increases.
Re:It's unfortunate ! (Score:4, Informative)
Or to put it another way, if I may quote the Church of the Sub-Genius:
"There are three kinds of people -- I call them Larrys, Curlys, and Moes. The Larrys don't even know that there are three types; if they're told, it's an abstraction, because they cannot imagine anything beyond Larry-ness. The Curlys know about it, and recognize the pecking order, but find ways of living with it cheerfully...for they are the imaginative, creative ones. The Moes not only know about it, but exploit and perpetuate it.
The naive, pleasant believers of all kinds are Larrys -- ineffectual, well-meaning do-gooders destined always to be victims, often without once guessing their status. Like sheep, they don't want to hear the unpleasant legends about "the slaughterhouse"; they /trust/ the strange two-legged beings who feed them. The artists, unsung scientific geniuses, political writers, and earnest disciples of the stranger cults are Curlys -- engaging, original, accident-prone but full of life, intuitively aware of the Moe forces plotting against them and trying to fight back. They can never defeat the Moes, however, without BECOMING Moes, which is impossible for a true Curly.
The Moes, then, are the fanatics, the ranters, the cult gurus, the Uri Gellers AND the Debunkers; they are the Resistance Leaders and the Ruling Class Bankers. They hate each other, but only because they want to control ALL the Larrys and Curlys themselves....Larrys and Curlys die in wars started by
rival Moes -- the Larrys willingly, the Curlys with great regret."
I never realized how much the Church of the Sub-Genius shares with Nietzche. Thanks, that's an insight that will leave me shaking in bed with nightmares someday. :)