The latest in our series of stunning, if anonymous, reminiscences.

The latest in a series of anonymous reminiscences It all started with a disturbing call in the middle of the night from the president of a real-estate company in which my venture-capital firm had an investment. He had just returned from visiting a subsidiary that built homes in a Southern city, and that by all accounts had turned out to be a very impressive investment. (It had built 80 homes by this point, and our figures showed that many of them had been sold at great profit.) But during his visit, the president discovered some surprising new data that blew him away.

As he explained to me at midnight, he asked the bookkeeper about one of the details on the monthly statement he received. When the bookkeeper asked, “What are these?” he responded, “That’s the statement we got from the president of the subsidiary.”

“Gee, I’ve never seen those numbers before.”

As it turns out, none of the 80 houses had even been completed. What’s more, in order to raise money for working on the earlier houses, the subsidiary head kept starting new houses, drawing down initial construction financing and then applying that to the expenses of the earlier ones.

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