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I hate calling things bubbles, but I think we're in a period of extreme euphoria where you read and speak to investors and they say that the numbers don't matter and the financial statements no longer matter because this is changing the world. I say, well, I've seen this before. You know, I saw that Nortel was changing the world and Lucent and Cisco and 360 networks.
They were building out the infrastructure of the internet that we're using today. But those companies don't exist anymore. Anthony Shilopati is a forensic accountant who saw what others missed, predicting the collapse of both Valiant Pharmaceuticals and Nortel long before it happened. He spent decades reading what companies don't want you to see, the footnotes.
Now he's spotting familiar warning signs in today's AI boom. What are the red flags you look for? It's not red flags. We call them flammable items. It's a three-stage process. The first stage is... This episode of The Knowledge Project is for informational purposes only. The views and opinions expressed by Shane Parrish or our guests are solely their own.
Nothing in this conversation should be considered investment advice, financial guidance, or a recommendation to buy or sell any security. Always do your own due diligence or consult with a qualified financial advisor before making investment decisions. It's time to listen and learn.
I want to start with how you got into forensic accounting.
I was an accountant and I was working at Arthur Anderson doing the normal audit sort of preparatory work. And I found it unfulfilling because the work I would do, I would find interesting or concerns with the accounting or otherwise. And the clients, it didn't end up ending anywhere. So I
Uh, what ended up happening was the, there was some due diligence work to do where we could do actually look at transactions, companies calling us to say, you know, we want to spin out this business or we want to make this acquisition. And then I asked, put my hand up, said, listen, can I do that sort of work? And then I started doing it and I loved it. I saw some huge fulfillment.
And then it's all about people you meet. I met a gentleman named Al Rosen and he was head of accounting at York University. And he was a forensic accountant. He had his own practice. He taught us to pass the UFI at the exam or the CPA exam at the time. And I said, you know, I'd like to work with you. And he said, well, you get your CA work done and then we'll think about it.
And that's what I did. And so then I tutelaged under him for some four years. And that really made it happen. You weren't on the Enron file, were you? I was not on the Enron file. I left Arthur Anderson in 1997. Couldn't even spell Enron at the time. And it's a very sad thing what happened. What did happen at Enron? They essentially had a number of off-balance sheet exposures.
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