Chapter Twenty Townsend
Chapter Twenty
Townsend
The email arrives without warning on a Tuesday morning, perfectly polite but as foreboding as a death sentence: Sage Clinic wants to look at his books.
Townsend skims through the message once, twice, and then a third time, just to make sure he’s not overreacting .
. . want to perform due diligence as part of our new partnership and potential equity investment .
. . preliminary list of documents and information needed for review .
. . includes, but is not limited to, user metrics data such as monthly recurring revenue per user, customer lifetime value, retention rate, origination sources .
. . please provide at your earliest convenience.
Sage Clinic isn’t accusing him of anything, Townsend tells himself.
In fact, the company is offering to invest in AutoInTune, to help it grow for their mutual benefit.
He’s merely being asked to hand over some documents.
The problem, of course, is that the real documents will demonstrate that he’s been providing false information about the size of his company’s user base.
And if he doesn’t start increasing membership (and stop inflating his numbers in the meantime), he’s going to be in deep shit . . . if he isn’t already.
Sage Clinic could rescind its offer. Worse than that: He could go to fucking prison.
As reluctant as he is to do so, he knows who he must call. He sighs, thumbs through his contacts, and then selects the name of his dad’s old college roommate, Carter Bonier.
He answers after the first ring. “You got Carter.”
“Carter, hi.” Townsend forces a smile, hoping it may inject some more enthusiasm into his voice. “This is Townsend, Randolph Fuller’s kid.”
A phlegmy cough erupts in Townsend’s ear, likely the result of those Nicaraguan cigars that he and Townsend’s dad used to smoke like fiends. “Of course, of course. It’s been too long. How are you holding up, son?”
“I’m good.” Townsend pauses, reconsidering his lie. If Carter—a former federal prosecutor turned partner at Rutland the whole day was a blur, made blurrier by the bottle of scotch he downed to self-medicate.
Once Carter settles behind his desk—and Townsend in the much smaller chair facing it—he gets right to business. “Who’s the trouble with, son? A girl?”
If only a girl were his main issue. “No. It’s with some documents requested by a potential investor.”
“Ah, shit.” Carter cranes back in his chair. “What’s going on?”
Making sure to give no more information than he needs to, Townsend tells Carter about his new partnership with Sage Clinic and its due diligence request. “Financials, audits, prospectuses, investor presentations, communications—they want everything.” Townsend runs a hand through his hair.
“And I have to give it to them, right? Including user metrics?”
Carter gives him a cryptic look. “Is there a reason you wouldn’t want to?”
Is he really going to make him say it? Carter isn’t representing him yet; he has no idea whether there’s any attorney-client privilege at work here. But surely his father’s memory will at least grant him Carter’s discretion. “I used synthetic data to get the offer.”
Apparently, this isn’t the right thing to say. Carter groans. “Synthetic data? You mean fake data?”
“The data makes it appear as though my company has over two hundred thousand members. In reality, I have fewer than twenty-five thousand.” Saying it out loud makes it seem so much worse than it does on paper.
“Have you talked to your CFO about the request?”
“I . . .” Townsend’s face burns. “I don’t have a CFO.”
“How about a CIO?”
“I plan on hiring those roles once I secure more funding.”
“You’re telling me AutoInTune is just you?”
“I have a team of nine. But they’re all software engineers and graphic designers, except for my clinic ops lead. And my director of engineering.”
“Is that who you asked to generate the false data?”
“No, of course not. I paid a data science professor to manufacture it.”
Townsend can still recall nearly every word of his conversation with Dr. Eileen Drew when they first met at a coffee shop back in early May.
She was in her mid-thirties—young for a professor—and saddled with student loans.
She had experience generating synthetic data like this, she told him, and the opportunity to make some easy cash was too good to pass up.
(Synthetic data—that’s the term she kept using, and Townsend liked how professional it sounded.) She could contact an external data compiler and make it appear as though AutoInTune boasted ten times the number of registered users that it actually had, complete with identifying information and unique IDs.
It would cost him, of course, but she promised it would look legit.
She made it seem simple—harmless, even. She made it seem as though this was done all the time.
So Townsend shook her hand and wired her the money.
A few weeks later, he had his list of over two hundred thousand synthetically generated AutoInTune members, ready to impress anyone who may ask to see it.
For a little while, Townsend thought he would get away with it . . . so long as no one tried to audit him. That no longer seems to be a reasonable expectation.
It’s one thing to present those falsified numbers to potential investors, to feel as confident as possible selling a company he genuinely believes in and wants to see reach its full potential.
But to hand over manufactured documents to an actual committed investor and pass them off as real—that is a step too far for Townsend’s comfort. He’s a salesman, not a criminal.
Not to mention that anyone who looks too closely at the data may just see through the smoke and mirrors.
Sitting across from him now, Dad’s old friend doesn’t have to say a word for Townsend to know what he’s thinking: What an amateur. What a fool. At the risk of sounding even more foolish (but unable to stop himself), he asks, “What could happen if they figure out what I’ve done?”
“Well.” Heaving another heavy sigh, Carter interlaces his sausage-like fingers on top of his desk and leans forward.
“If this due diligence uncovers any fraud—and it sounds like it will—Sage is going to pull the plug on your partnership, but that’s the least of your worries.
They could take this to the Securities and Exchange Commission.
Then you’re probably looking at a monetary penalty.
A substantial one. You could also be barred from serving as an officer or director of a public company. ”
“But will I get”—the words catch in Townsend’s throat, forcing him to sputter them out—“prison time?”
“That wouldn’t come from the SEC. It’s when the DOJ, USAO, and FBI come knocking that you should be worried.”
“And will that happen?”
Carter shrugs. “It’s possible.”
“Fuck.” Townsend presses his fingertips to his temples. He will not cry. He will handle this like a man, like his father would.
“Who else knows?”
The question doesn’t compute; Townsend is too busy picturing himself in an orange prison jumpsuit. “Knows what?”
“Knows that . . .” His lips pulling into a tight line, Carter makes a vague gesture with one hand.
“That I committed fraud?” It seems silly, at this point, not to openly acknowledge what he’s done.
“I just want to know who else is aware of this ‘synthetic data’”—Carter adds emphasis to the words with air quotes here—“other than that data science professor.”
His mind immediately goes to Orson Livingston, who’s treated Townsend like persona non grata ever since his investor presentation.
“There’s a VC who didn’t seem to buy my numbers.
He may have done a little digging, but he’s my buddy’s brother.
I don’t think he would say anything to either Sage or the feds. ”
“What about a girlfriend?”