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Author Topic: [Announcement] Butterfly Labs  (Read 64004 times)
JMAHH
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September 20, 2012, 03:36:22 PM
 #301

Maybe they ARE pirate.

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September 20, 2012, 04:25:50 PM
 #302

WARNING
BFL CUSTOMERS

The CEO of Butterfly Labs is a convicted felon (25M USD worth of mail fraud.)

BFL hid this fact from its customers. (As they knew how the silly internet would react to this information.)

The information here presented would predictably make it much harder from BFL to acquire huge amounts of money through pre-orders.

(Yes, they have successfully taken in huge amounts of pre-paid pre-orders on untested, unreleased products, as can be easily verified.)

This post aims to collate the relevant, publicly available information and present it in a concise, readable format.



A concise summary of evidence:


(1) Chris Vleisides is the President/Director of Butterfly Labs Inc:

Quote

ENTITY DETAIL Name: BF Labs Inc.
...
President / Director: CHRIS VLEISIDES 2507 JEFFERSON KANSAS CITY, MO 64108

https://wyobiz.wy.gov/Business/FilingDetails.aspx?eFNum=149144214231010201167112190255028042109060235081


(2) Mr. Vleisides and associates orchestrated a massive mail order scam that ran from 1990 to 2006, causing a loss of at least 19M USD out of the ~25M USD invested in the scheme:

Quote from:  US Postal Inspection Service

Sonny Chris Vleisides, 39, previously of Kansas City, MO was arrested in 2007 and held two years in Italy before he was extradited to the United States.
Vleisides was sentenced to 14 months in prison followed by three years supervised release after pleading to one count of mail fraud.

https://postalinspectors.uspis.gov/radDocs/PressRoom/nr110114.htm

(3) It has been established that Mr. Vleisides implicated in the mail order scam and Vleisides of BFL is the same person:

Quote from: Inaba

Sonny Vleisides is associated with BFL and it's the same Sonny listed in the case documents.  He was involved in off shore gaming in the capacity of selling and providing software engineering to companies that did the actual offshore gaming (there is even a US patent application for the process). The industry came under attack (as we all remember) around that time, and Mr. Vleisides was caught up in the process as well as a good portion of the industry based in Costa Rica.

Although this may be cause for concern to some, the fact is that we're a robust company with 22 employees.  One of them has a colorful background in offshore libertarianism.  If I thought there was even the possibility of something unsavory going on within BFL, you can rest assured I would a) not be part of it and b) would let everyone know it.

The reality is, we are legitimate, we have released revolutionary products and we are going to release more revolutionary products.  I was made aware of this back story prior to my employment and I evaluated it and concluded that it was immaterial to the business at hand and thus joined BFL.  There was nothing hidden from me and Sonny has always answered questions and been completely open about his past, but I think we can all agree that it's not something you just announce to the world.

https://bitcointalk.org/index.php?topic=109349.msg1202784#msg1202784

Inaba is an employee of Butterfly Labs Inc, who posts on these forums under the names inaba and BFL_Josh.


(4) The mechanics of the scam, per DOJ Agent testimony:

Quote from: Affidavit for Extradition Warrant — USA vs. Vleisides

A joint investigation involving the IRS-CID and the United States Postal Inspection Service (USPIS), revealed that from at least 1990 through July 2006, SONNY VLEISIDES, James Ray Houston, Dennis Emmett, William Cloud, Henry Walther, Scott Henry Walther, and others committed a massive international lottery scam using the following company names: Shamrock Agency, German Swiss Group, World Expert Fund, Mutual Medical Insurance Co, Old Amsterdam Trust Co, Euro American Fax Co, European Union Commission, EU American Payment Co, Global Search Network, North American Foreign Payments Services, Wor'dwide Verification Service, and others. VLEISIDES ran the scheme along with Houston and Emmett. VLEISIDES, Houston and Emmett, who were all located in Costa Rica, worked with mailing houses which, at the direction of VLEISIDES, Houston, and Emmett, sent out tens of thousands of mailings to victims in the United States, many of whom were elderly. The mailings contained false statements, half truths, and omissions, and induced the victims to participate in various international lotteries, falsely stating that if the victims participated, they were guaranteed to win or had a very good chance to win. The mailings directed the victims to send their money to Ireland, at d the Netherlands, among other locations, where William Cloud had set up addresses with commercial mail receiving agencies and individuals to forward the money, eventually, back to the United States. After receipt at the commercial mail receiving agencies, the victims' money was sent to Henry Walther, who, along with his son Scott Henry Walther, deposited the money into various bank accounts and then distributed it as directed by VLEISIDES, Houston, and Emmett. Some of the money was spent on furthering the criminal activity. Some of the money was paid out to victims in small-dollar checks that the co-schemers misrepresented to be lottery winnings. The rest of the money was paid out to the co-schemers and others for their own use. VLEISIDES and the other defendants did not buy any lottery tickets, and the vast majority of the victims lost the money they sent. The total loss from the scheme is in excess of $19 million.

...

An analysis was done on approximately twenty of the bank accounts established in the United States at the direction of VLEISIDES and his co-schemers. The analysis revealed, in summary, that the victims' money was first deposited into accounts established by the co-schemers at numerous banks in accounts with names that sound like official lotteries: SHAMROCK AGENCY, WORLD EXPERT, OLD AMSTERDAM, GERMAN SWISS, and EUC. (Hereinafter, accounts at this first layer will be referred to as "Deposit Accounts.") The co-schemers obtained over $19 million from tens of thousands of victims and deposited them into these accounts. After the co-schemers deposited the victims' money into the Deposit Accounts, they transferred the money to the next layer of accounts, hereinafter referred to as "Payment Accounts." These accounts were in names that included NORTH AMERICAN PAYMENT and EU PAYMENT SERVICE. From the Payment Accounts, the co-schemers wrote checks represented as winnings and sent them back to the victims. The amount of the alleged "winnings" was far less than the amount the victims sent in - for the over $19 million going into the accounts from victims, only approximately 20% was sent back to victims in the form of "winning" checks. The co-schemers transferred some of the money from the Deposit Accounts and Payment Accounts to the next layer of accounts, which will hereinafter be referred to as "Syphon Accounts." The co-schemers wrote checks (or used wire transfers) from the Lottery Accounts and the Payment Accounts to the Syphon Accounts, which were in names that included WESTERN INTERNET, BUTTERFIELD, CARNEGIE and HENRY WALTHER ATTORNEY WIRE ACCOUNT. Money from the Syphon Accounts was used to continue the scheme by paying scheme expenses, as well as to provide benefits to the co-schemers. The co-schemers also took money at each layer in the form of checks to cash, checks to themselves, or checks to the payment of personal or scheme expenses.

http://www.scribd.com/doc/106417808/Affidavit-for-Extradition-Warrant


(5) Mr Vleisides, the CEO of Butterfly Labs is forbidden from soliciting funds according to the terms of his parole.

Quote
September 15, 2010

UNITED STATES OF AMERICA v. SONNY VLEISIDES

...
The defendant is hereby placed on supervised release, effective immediately, for a term of three years under the following terms and conditions:
...
The defendant shall not engage, as whole or partial owner, employee or otherwise, in any business involving loan programs, gambling or gaming activities, telemarketing activities, investment programs or any other business involving the solicitation of funds or cold-calls to customers without the express approval of the Probation Officer prior to engagement in such employment.
...
All fines are waived as it is found that the defendant does not have the ability to pay a fine.
...
As directed by the Probation Officer, the defendant shall provide to the Probation Officer: (1) a signed release authorizing credit report inquiries; (2) federal and state income tax returns or a signed release authorizing their disclosure and (3) an accurate financial statement, with supporting documentation as to all assets, income and expenses of the defendant. In addition, the defendant shall not apply for any loan or open any line of credit without prior approval of the Probation Officer.
...
The defendant shall not transfer, sell, give away, or otherwise convey any asset with a fair market value in excess of $500 without approval of the Probation Officer until all financial obligations imposed by the Court have been satisfied in full.
...
Upon a finding of violation of probation or supervised release, I understand that the court may (1) revoke supervision, (2) extend the term of supervision, and/or (3) modify the conditions of supervision.

http://ca.findacase.com/research/wfrmDocViewer.aspx/xq/fac.20100915_0004129.CCA.htm/qx

Thus, it can be seen the CEO of Butterfly Labs is likely* in violation of his parole.

* (Unless given express prior approval from his probation officer on a number of counts.)



To return to the first point, the CEO of BFL is a convicted felon and a scammer, as should be evident from the above.

I sincerely hope BFL is not simply a preorder scam, and I hope BFL does everything in their power to show that they're in fact not.


However, alarm bells should be ringing, and red lights flashing all over the place. This could be the biggest, and by far most professional scam yet.

For the time being, and under the weight of the public and indisputable evidence presented above, it seems prudent to say:

Do not order ASIC "Supercomputers", or other unreleased products from Butterfly Labs Inc.

This post summarizes what is known at the present time. This thread will be updated with new information as it becomes available.



Notes:

(1) This summary was originally posted to: Bryan Micon's List of Bitcoin Scammers, Shills, and Users Not To Trust IMO

I will quote this just so more people are warned...

Can we get an official explanation from BFL themselves please ?

ice_chill
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September 20, 2012, 04:29:09 PM
 #303

I hope BFL will not bother responding to provocations and accusations - that is not what this forum is for.
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September 20, 2012, 04:36:39 PM
 #304

I hope BFL will not bother responding to provocations and accusations - that is not what this forum is for.

What do you mean by "they will not bother responding to accusations" ?

It's their goddamn job to respond to accusations, ESPECIALLY on this forum ESPECIALLY in this topic. Every public company that wants to have proper reputation has to respond to such accusations, and their response can tell us a lot about what kind of people they are.

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September 20, 2012, 04:38:14 PM
 #305

I hope BFL will not bother responding to provocations and accusations - that is not what this forum is for.


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September 20, 2012, 04:44:04 PM
 #306

I hope BFL will not bother responding to provocations and accusations - that is not what this forum is for.
+1
ShadowOfHarbringer
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September 20, 2012, 04:48:48 PM
 #307

I hope BFL will not bother responding to provocations and accusations - that is not what this forum is for.
+1

Then what the hell is this forum for ?

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September 20, 2012, 04:49:17 PM
 #308

I hope BFL will not bother responding to provocations and accusations - that is not what this forum is for.
+1

Then what the hell is this forum for ?

just send me your money and shut up.

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mem
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September 20, 2012, 04:57:44 PM
 #309

just send me your money and shut up.

Inaba is that you ?

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September 20, 2012, 05:26:34 PM
 #310

The BFL single under my desk works great; hashing along at 819mh/s.  I just placed another order.  Order #881X.
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September 20, 2012, 06:50:20 PM
 #311

as with 99% of projects involving bitcoin...


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September 20, 2012, 09:08:55 PM
 #312


https://www.facebook.com/ButterflyLabs

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September 20, 2012, 09:13:29 PM
 #313

what peculiar timing.  Cheesy
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September 20, 2012, 09:38:48 PM
 #314

Why is everyone typing in huge colorful fonts?
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September 20, 2012, 10:50:44 PM
 #315

Why is everyone typing in huge colorful fonts?

Because
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September 20, 2012, 11:10:00 PM
 #316

Why is everyone typing in huge colorful fonts?
Haha I was just going to ask the same thing.

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September 20, 2012, 11:59:06 PM
 #317

So is this actually a scam or what?!
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September 21, 2012, 12:21:41 AM
 #318

So is this actually a scam or what?!

We will know by December...... But by then it will be to late....................








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September 21, 2012, 12:59:59 AM
 #319

All your base are belong to us

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September 21, 2012, 01:21:18 AM
 #320

So is this actually a scam or what?!

Well, that's the thing. We don't know. Nobody on the outside knows for sure. The people on the inside may not know.

When Vleisides' father, James Ray Houston, started his first documented Ponzi in 1974, it was apparently a real business. He took people's money and sold them silver coins, because paper currency is evil but money that can't be manufactured out of thin air is something that sensible people ought to appreciate.

As time went on, it was a pain in the ass for Houston's customers to take delivery of and store all of the silver they were buying. So he held it for them, in his vault, and gave them a receipt for their silver, instead. They could get it from his vault whenever they wanted.

But, as things go, it turns out that actually buying all of that silver was sort of a pain in the ass. It was easier to just spend the money on things like his campaign for governor of Nevada, or his former wife's car payments, or his rent. That's from his own testimony, at his trial.

The scam was revealed by the Las Vegas Review Journal the day before and the day of the gubernatorial election. They published pictures of the empty "vault". Houston still got 26,000 votes. After he was indicted he was a fugitive for 2 years. Once he was finally captured and tried, he was acquitted by a jury. The trial judge took the unprecedented step, after the verdict was read, of pointing out that if it had been a bench trial, he would have convicted Houston. "He is a plain and simple crook and will never be anything else", in the judge's words. 1,182 investors lost $3.5 million in 1974 dollars, the economic equivalent of $16.3 million today.

http://www.reviewjournal.com/lvrj_home/2006/Aug-12-Sat-2006/news/9007759.html

Houston was later convicted of mail fraud (for a different scam) in 1983.

So it's perfectly possible that BFL started as a legitimate business with real products and real customers. It's perfectly possible that BFL is a legitimate business today with real products and real customers. It may always be a legitimate business. On the other hand, if shit starts to go bad, probably the people running the company will fully disclose right away exactly what's going on. I mean, it's not like they'd commit fraud, right? Or stand up in federal court and lie because that seems to be the most expedient course of action.

"Actually, earlier, when I confessed to lying? I was lying. I am not a liar. Except for that one time, and that was different, because lying made my life a lot easier than telling the truth. Would you like to see a baby picture?"

After all, it's perfectly possible that they can explain to a jury that they took people's money planning to manufacture mining hardware, but it turned out to be more fun to spend the money on rent, cars, and political campaigns. As long as they weren't lying when they asked for the money, the fact that they changed their mind later isn't so relevant.

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