Look Before You Leap

Metals.com, Edward Hopper, and Magic Leap

Metals.com

Last year, I wrote an entire newsletter on Lucas Asher and his website Metals.com, based on an in-depth investigative series at Quartz. The wheels of justice in this country are not particularly well-oiled, and it took almost a year for law enforcement to investigate the company. But, good news! Last week, the feds and 30 states filed charges against the company for large scale fraud:

The lawsuit alleges Metals.com and its parent company TMTE defrauded $185 million from at least 1,600 investors and most are elderly—$140 million of the allegedly defrauded money came from retirement funds, according to the suit brought by the Commodity Futures Trading Commission (CFTC) and unsealed today. The company attracted the vulnerable investors by manipulating their fear of the “Deep State” and impersonating Fox News via ads on Facebook.

Essentially, prosecutors claim Metals.com targeted older conservatives and used fear as a sales tactic - telling them their retirement savings were only safe in precious metals, which the company would sell them. This year, with the coronavirus pandemic wreaking havoc on the country, they had an new, more potent pitch - the stock market was all over the place, and a recession loomed. They hawked collectible coins, which were worth much less than the company claimed.

Last year, when Quartz outed the Metals.com for alleged fraud, they did what any credibly accused set of scammers would do - they changed their name:

…the people behind Metals.com seemed to have abandoned that tainted brand, and instead used several new names and corporations to continue their business as usual, with the same salespeople executing the same playbook from the same desks.

Rather than spend time crafting a new, reputable brand, they made up company names that sounded a lot like other, established firms:

“They slowly phased out Metals.com, the website changed, they told us not to use ‘Metals’ anymore,” a former salesman, who asked to remain anonymous for fear of retribution, told Quartz. Instead, the salesmen used the names Barrick Capital, USA Mint, Retirement Insider, and Republican House Committee.

Nice. Salesmen opened up their rolodexes and started calling customers who’d been put off by the Metals.com brand, and started selling them coins again, under new monikers. So what did they do with Metals.com? Turned it into a site to sell…metal:

The website for Metals.com was replaced in mid-February with one that emphasizes the company’s supposed sale of industrial metals products, like aluminum tubing.

But, the content of the site appears to have been cribbed from a company that really does sell industrial metals. The photos on Metals.com’s site were taken at the offices of OnlineMetals.com, a bona fide retailer of industrial metals

Amazing. They couldn’t even be bothered to make a real fake metals site, and just stole one whole cloth from a Google search.

When I last wrote about the company, much of the focus was on its charismatic - and deeply weird - founder, Lucas Asher. What’s he been up to? Apparently, using the millions he stole from retirees to attempt a career rebrand:

Earlier this month, he wrote an op-ed for CNBC about the “hyperloop.” He landed glowing interviews in Forbes, the Jewish Voice and Resident Magazine. The stories portray him as “one of the most prominent millennial investors” and as a “hobbyist skydiver who made his first million before he was 20.”

Asher is named personally in the lawsuit, along with a couple of his aliases. This may finally put an end to his years of scamming the elderly, and hopefully return some of the stolen funds to people in dire need of retirement savings.

Edward Hopper

I often ask - is art a scam? Typically, when I say this I am referring to the art markets, where rich people spend obscene amounts of money on status objects. There are also the art forgers, though, again, their usual goal is to fleece the rich with their fakes. What about the rare artist who commits professional fraud, but for a non-financial reason?

Edward Hopper is a celebrated American painter, known for his realist style. He went to great lengths to cultivate an image as a homespun art prodigy, once claiming he was his own artistic influence. Well, it turns out Hopper did have some influences in his early years, including an art magazine whose work he copied:

In researching his doctorate on Edward Hopper, for the storied Courtauld Institute in London, Mr. Shadwick has discovered that three of the great American’s earliest oil paintings, from the 1890s, can only barely count as his original images. Two are copies of paintings Mr. Shadwick found reproduced in a magazine for amateur artists published in the years before Hopper’s paintings.

It is quite common for young artists to copy works to learn the craft. What it seems Hopper did, however, was to pass these paintings off as originals, inspired by his childhood in New York.

Why did he do this? The researcher who uncovered the fraud believes it was Hopper’s need to see himself as a rugged American individualist, the lone man, battling to understand the complexities of the world:

As the United States withdrew into itself in the period between the world wars, an “Americanist” tendency took stronger hold than ever in the country’s high culture, Mr. Shadwick explained, “and Hopper played along with it. Hopper knew exactly what he was doing for the market for his work.” As Mr. Shadwick writes, in thesis-ese, Hopper’s “centring of the white male Anglo-Saxon American experience, his regionalist sympathies for New England, and his eventual aversion to European-style modernism,” can all be connected to thoughts and feelings about the United States that were widely held in his day.

As Hopper grew in stature, he knew it would help his brand to seem as though he was self-taught, an inspired artistic genius cut from the American working class.

Hopper’s belief that Americana was rooted in simplicity and realism, and his need to make that story his own reminds me of a quote from Robert Frost:

"There are two types of realists: the one who offers a good deal of dirt with his potato to show that it is a real one, and the one who is satisfied with the potato brushed clean. I'm inclined to be the second kind. To me, the thing that art does for life is to clean it, to strip it to form.

Some artists clean up their impressions of the world, and some insist on showing you the dirt. Perhaps it’s why, later in his career, Hopper painted intentionally “awkward” works that mystified his critics:

Mr. Shadwick’s discovery about those first paintings may also illuminate Hopper’s much later, most iconic masterpieces. Critics and scholars have always been intrigued by an awkwardness that Hopper allowed himself in many of his classic paintings: seas that look more painted than liquid in his famous “Ground Swell”; the awkward anatomy of his female nude in “Morning in a City” or the stony faces of the diners in “Nighthawks.”

Now that we know that Hopper was never a painting prodigy, we can think of his later paintings as deliberately revisiting the limitations of his adolescence, and finding virtue and power there. That’s a classic move in American culture: To see the unschooled and homespun as more authentic — and especially as more authentically American — than the sophistries of those decadent old Europeans.

Hopper drew on the failures of his youth to impart his later work with an authenticity that he felt made it more American, more real. Ironically, the reason the artist eschewed European stylings may have had more to do with his past than his artistic sensibilities. Hopper had tried his hand at French art, and wasn’t well received:

Moving on from copying, the young Hopper spent a long spell in art schools in New York and then flirted for a while with modern French styles and subjects. But when a 1915 show of his Frenchified paintings got panned, while a single New York cityscape earned praise, Hopper knew where to head next: “He refines and refines and refines these ideas of what it means to be an American painter,” Mr. Shadwick said.

Hopper was not a brave pioneer, blazing a trail through the art world despite the slings and arrows - he was sensitive to the critics, and embraced the style he deemed most commercially viable. How utterly American!

Parallels between Hopper’s time and our current moment are everywhere. America has once again turned inward. One political party is running on a platform of returning the country to an imagined ideal of the 1950s - a place that never existed. Individualism is aspirational - whether it’s rise and grind culture, or arming yourself for the apocalypse. American leaders fabricate backstories to convince the public that they are the real, authentic citizens.

Does it matter that Hopper copied some art when he was young? Does it end up as anything other than a footnote in his legacy? Most importantly, will it harm the market for his art? Probably not, because art markets are irrational and Hopper was a good artist for most of his career! Rich people can relax, their status symbols are safe.

Does it mean anything for how we see his work? Our country was never the America Hopper saw, but art’s purpose is not always to tell a coherent story. Decoupling one man’s obsession with his self image and professional legacy from how his work impacted those who saw it is fine. I think it’s why I enjoy stories about the art world so much - the art in question may be wonderful, but the people are not! The amounts of money, however, are significant, creating the perfect landscape for fraud, trickery, and greed. It’s endless content for a scam newsletter!

Magic Leap

You’ve probably heard of VR, which stands for virtual reality. You may have heard of AR, or augmented reality. If you have, you may have heard of it in reference to Google Glass, the much-hyped AR glasses that many people found creepy. Another company has spent the last 9 years building what it claimed was a groundbreaking AR system in the swamps of Florida. Meet Magic Leap and its idiosyncratic founder, Rony Abovitz:

Intrigue spread through the tech industry in the years after Magic Leap’s founding in 2011. Abovitz liked to keep it weird: A TEDx Talk in 2012 titled “the synthesis of imagination” consisted entirely of Abovitz wordlessly dancing around in a spacesuit alongside several people in furry monster outfits. Another video showed a life-size whale splashing through a school gymnasium. Investors flew from the Bay Area to Florida and signed strict non-disclosure agreements so they could strap on unwieldy prototypes. Then they wrote big checks and raved coyly about how they now understood the future of computing.

Tech investors dumping tons of money into vague technology based on hype around a charismatic founder? Doesn’t sound familiar at all!

Magic Leap raised $3.5 billion dollars in funding, without ever bringing a viable* product to market. This isn’t uncommon - when you’re trying to be the first company to solve a difficult problem, it can be expensive. Abovitz, according to Bloomberg, decided that Magic Leap should have in-house manufacturing for its headsets, which was wildly expensive compared to outsourcing components. He did it to wow investors and keep the money flowing:

Greco led a tour of the production lines, where workers in clean-room bunny suits operated machinery. At the time, he was preoccupied with adding a second assembly line that would be nearly autonomous, he said. “Rony loves it, because essentially we’re going to have the robots, like little R2D2s, that are literally going to move the materials around,” Greco said.

Again, it’s probably a good idea to build your technology yourself if other companies can’t build it, but that wasn’t the case with Magic Leap’s headsets. Also, spending millions of dollars on factories when your product doesn’t work yet is not necessarily the best use of funds:

Magic Leap designed a supply chain fit for a multinational corporation. The lenses and other materials were built in Florida and shipped to Guadalajara, Mexico, where a partner assembled the headsets and sent them back to the U.S.

So, Abovitz spent years hyping up the Magic Leap headsets and leading press on tours through his futuristic manufactory, spending billions of dollars in R&D. They created massive prototypes that wowed journalists. And, to be fair, with a giant helmet hooked to a large stationary computer, the Magic Leap AR experience was reportedly pretty cool! But it wasn’t the sleek, portable interface Abovitz had promised.

Getting their technology into something resembling a normal sized headset, as it turned out, was an intractable problem:

The headset Magic Leap released two years ago was based on a different technique, and its limitations were evident immediately. A narrow field of view meant that digital images had to be small or risk appearing cut off, and the headsets couldn’t be used reliably outdoors.

[…]

Even engineers who used to work at Magic Leap questioned whether the company’s signature lenses will ever be fit for a consumer device because they use too much power and absorb too much light to operate outside of controlled environments.

Google, after realizing their Glass product wasn’t a fit for the average consumer, marketed the product to medical professionals. Microsoft’s HoloLens, the company’s pricey attempt at AR, is now pitched to corporate customers. Magic Leap, on the other hand, doesn’t appear to have a plan. Abovitz resigned in May, and the company has appointed a new CEO who previously worked at Microsoft. She faces a tough task - coming in to pick up the pieces of a visionary’s failed dream. I feel the worst for Magic Leap’s employees, who moved to a literal swamp in Florida, only to be set up to fail by a founder who couldn’t solve the AR puzzle, and left them holding the goggles.

*correction - in the first version of this piece I incorrectly said Magic Leap had never brought a product to market. The Magic Leap One was released in 2018 to mixed reviews, and did not sell well.

Short Cons

Reveal News - “With weekly data from 2016 through 2019 from more than 150 Amazon warehouses, the records definitively expose the brutal cost to workers of Amazon’s vast shipping empire – and the bald misrepresentations the company has deployed to hide its growing safety crisis.”

NBC News - “Among the businesses that Tristan Pan, 38, allegedly sought Payroll Protection Program loans for businesses including The Night’s Watch LLC, White Walker LLC and Khaleesi LLC…”

CNBC - “JPMorgan Chase is close to paying almost $1 billion to resolve government investigations into the alleged manipulation of metal and Treasuries markets, according to a person with knowledge of the matter.”

NY Mag - “No one I spoke with in either national security or intelligence believes Palantir played any significant role in finding bin Laden.”

NPR - “This time, on Instagram, Fradin-Read was promoting more than just "wellness." In the face of a deadly pandemic, she claimed to have an "FDA-approved" medicine that worked like "magic."”

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