"100% frauds"— Shark Tank's Mark Cuban comments on shorting fraudulent companies

Shark Tank investor Mark Cuban shared that he used to "make a ton of money" shorting fraudulent companies. In the October 2 episode of the Flagrant podcast, Cuban didn’t hold back, highlighting the widespread issues with insurance companies and their role in driving up medication prices.

The Shark Tank investor shared that he founded Sharesleuth.com to expose and short fraudulent companies, taking a firm stance against their practices while profiting significantly in the process.

"I just killed [fraudulent companies]. And I would tell him, like, 'I'm sure they would publish the article and it would say this is Mark Cuban, short position. And yeah, just killed it. [Because they were fraudulent companies] Frauds, Yeah, 100% frauds," Cuban shared.

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Shark Tank investor Mark Cuban shares how he started Sharesleuth.com to short fraudulent companies

On the Flagrant podcast, Shark Tank star Mark Cuban discussed the insurance industry and how it gets away with charging high medicine prices, primarily because most people are not aware of real prices.

When he partnered with Cost Plus Drugs, his company provided medicine along with a transparent pricing list. Mark shared that the FTC (Federal Trade Commission) used this list to go after the insurance companies that charged way too much.

"There were researchers that are saying, 'Look, if insurance companies that work with Medicare, but through Cost Plus [Drugs] these nine drugs would save taxpayers $3.6 billion," he shared.

The Shark Tank investor continued:

"And then they just did a report from the FTC where they used our pricing to say these PBM's, the middle men, they're ripping off people left and right. And so I mean, we f*cking no doubt, absolutely no doubt that we were right there because it all started when we started releasing our price list."

Mark emphasized that if these public insurance companies adjusted to his prices, they’d be "toast," with their sales plummeting to a quarter of the usual.

Host Andrew Schulz wondered if the solution to this issue was to short these companies. Using NBA teams as an example, he explained how they aim to own all the surrounding real estate when building a new arena to profit from developing the area.

Considering this, Andrew suggested it would be genius for someone to identify a super-inflated white space like the insurance business and short all the companies involved while developing something that would cause them to tank.

Mark understood where Andrew was going with this and shared that he used to "make a ton of money shorting companies like this." He recalled starting a company called sharesleuth.com.

"I hired this guy to just go out and find public information, only public information about bullsh*t companies because there's all these bullshit companies. He would find companies that were putting out press releases about this new warehouse they opened. And so he would send somebody to the warehouse [to find] no utilities, nobody there, all that shit," he continued.

Flagrant podcast co-host Akaash Singh added that these fraudulent companies were cooking the books, while Mark just called them out and waited. He noted that with the insurance company now involved, it would be crucial to ensure that they could also be taken down.

"Because they're big and they're not stupid. And so they're going to react and come up with different ideas," Mark chimed.

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Shark Tank season 16 episodes air every Friday on ABC.