How to Make Billions from Exposing Fraud | E2234

Key Concepts

• Supersonic Flight Revival: Boom aims to overcome the economic and technical hurdles that led to the Concorde’s failure, leveraging modern materials and aerodynamic design to make supersonic travel commercially viable.
• Fraud Detection & Prosecution: The Anti-Fraud Company utilizes AI and legal expertise to identify and prosecute large-scale fraud against the US government under the False Claims Act (FCA), capitalizing on a significant untapped market.
• Leveraging Whistleblower Laws: The Anti-Fraud Company uniquely acts as the whistleblower, rather than representing them, to pursue fraudulent claims and recover funds.
• AI-Driven Investigation: Large Language Models (LLMs) and data ontologization are central to the Anti-Fraud Company’s strategy for identifying patterns of fraud within vast datasets.

Boom – Reviving Supersonic Flight

Blake Schul founded Boom motivated by a desire to experience supersonic flight, believing advancements in materials (carbon fiber composites), aerodynamics, and engine technology now make it economically feasible. The Concorde failed due to high ticket prices (around $20,000 per seat), limited production (20 planes), and insufficient passenger volume – launched before the technology was mature. Boom aims for Mach 2.2 (1451 mph) and a 30% improvement in fuel economy compared to Concorde, targeting a supersonic seat cost comparable to a lay-flat business class seat.

Boom’s design differs from Concorde’s aluminum construction, utilizing a dynamically shaped carbon fiber composite structure optimized for supersonic flight using software modeling. They are addressing the issue of sonic booms, aiming for a 100x reduction compared to Concorde, but initially focusing on overwater routes due to the US ban on overland supersonic flight. The company has raised over $700 million and has Letters of Intent (LOIs) for 25 aircraft, including 10 from Virgin Group, with plans to require deposits. Key aerodynamic principles like Area Ruling are employed in the design.

The Anti-Fraud Company – Monetizing Whistleblowing

Alex Sheay’s Anti-Fraud Company operates as the whistleblower, investigating potential fraud against the government and filing lawsuits under the False Claims Act (FCA), retaining 15-30% of recovered funds. The FCA, originally enacted during the Civil War, allows individuals (and now companies) to sue on behalf of the government. Estimates of government fraud range from $500 billion to $1.5 trillion annually, while current FCA recoveries are around $4 billion per year, representing a significant Total Addressable Market (TAM).

The company focuses on cases of corporations overbilling the government, leveraging an engineer (Sheay) and two lawyers with expertise in FTC law (pharma/Medicare/Medicaid fraud) and higher education antitrust law. Sheay’s initial inspiration came from identifying potential fraud at Brown University (tuition and federal funding) – $500 million in federal funding supporting 4,000 administrators versus a smaller number of professors – and realizing the potential of the FCA.

Business Model & AI Implementation

The Anti-Fraud Company’s business model is described as “fraud bounty hunting,” akin to a biotech firm developing patents. Cases can take 2-7 years to resolve, but faster resolutions are possible with DOJ involvement. They plan to monetize cases by selling portions to litigation finance firms, utilizing Special Purpose Vehicles (SPVs) for each case.

The company utilizes Large Language Models (LLMs) to analyze textual data and structured government datasets, identifying patterns indicative of fraud. Sheay’s prior experience at Palantir informs their data ontologization approach. Litigation finance firms provide upfront funding for legal fees in exchange for a percentage of the eventual recovery, with the market being established, particularly for large class action lawsuits. Examples of successful cases include antitrust lawsuits against Ivy League schools regarding tuition pricing, and the recent Minnesota daycare fraud case exposed by Nick Shirley.

Team Building & Future Strategy

Recruitment focuses on candidates with a passion for the mission and experience in high-growth, chaotic environments – “people who’ve been through Uber HR can do like anything basically.” The company emphasizes cultural fit and resilience. The core argument is that the government is unable to effectively monitor and prevent large-scale fraud, creating a significant opportunity for private sector intervention. The company aims to pursue billion-dollar frauds, believing traces will be found in data.

Conclusion

Both Boom and the Anti-Fraud Company represent ambitious ventures tackling significant challenges. Boom aims to redefine air travel through technological innovation and economic viability, while the Anti-Fraud Company seeks to address systemic inefficiencies in government oversight through data-driven investigation and legal action. Both companies demonstrate a willingness to disrupt established norms and leverage emerging technologies to capitalize on substantial market opportunities.