Matthew Cox: FBI Most Wanted Con Man - $55 Million in Bank Fraud | Lex Fridman Podcast #409

1. 0:00 – 1:59

   Introduction

   1. MCMatthew Cox0:00

      She found like, $40,000 in cash in my freezer one night. So she's like, "What is going on?" You know? And I, so we have this conversation and I tell her, "Look, people are looking for me." "Who?" "Law enforcement." "Which ones?" "All of them." You know, and she's like, "That doesn't even, what, for what?" I go, "Mostly bank fraud." And she's like, "Well how are they not finding you? I mean everybody, you know, people know you, like, you know, your general contractor," which I met four months before, this guy six months before, this one two months before." You know? She's like, "So-and-so, so-and-so, so..." And I'm like, "Right, right, well," I said, "Well..." She's like, "I mean, they've got your name, they've got your..." I go, "Well, that's identity theft." And she was like, "W- what do you mean?" I said, "Well my name's not, you know, my name's not, it's not Joseph Carter." "And wha- what is your name? What is your name?" I go, "Look, you know, it's, it's, you don't need, don't even worry about it."

   2. LFLex Fridman1:02

      The following is a conversation with Matthew Cox, a con man recently released from federal prison where he served 13 years for bank fraud, mortgage fraud, identity theft, passport fraud and other charges. He has admitted guilt to all of it. He has written true crime stories of many of his fellow prisoners and now he continues this work by interviewing criminals about their crimes on his YouTube channel that I recommend called Inside True Crime. Exploring the mind of a criminal is exploring human nature at the extremes, often in its most raw and illuminating form, and that is something I definitely want to do with this podcast, to understand the human mind and everything it is capable of. This is the Lex Fridman Podcast. To support it, please check out our sponsors in the description, and now, dear friends, here's Matthew Cox.

2. 1:59 – 16:47

   Mortgage fraud

   1. LFLex Fridman1:59

      What was the first crime you committed?

   2. MCMatthew Cox2:03

      The first mortgage I ever did.

   3. LFLex Fridman2:04

      A mortgage is me borrowing money from a bank to buy a house.

   4. MCMatthew Cox2:08

      Yeah.

   5. LFLex Fridman2:09

      How can you find a way to commit crime in this? How can you do fraud in this space?

   6. MCMatthew Cox2:16

      It's, it's very difficult for the average guy to commit fraud.

   7. LFLex Fridman2:20

      Mm-hmm.

   8. MCMatthew Cox2:20

      Because there's so many safeguards set up. Um, you know, if you were to go in and say, "Um, I make $300,000 a year," okay well we want your W-2s, we want your pay stubs, we're gonna call your employer, we're gonna check to make sure your employer, how long they've been incorporated, we're gonna check to make sure they're registered, we're gonna... It's like, ugh, your whole plan fell apart. You know? Because the average guy can't do that. He can't even come up with a, with the pay stub and W-2. So the average person, you know, or I'm gonna put down this much money, but you're gonna borrow that money from the seller, you know? Okay, well then they start asking for bank statements, where did the money come from, how long has it been in your bank? Like you can't even have it put in your bank for a day, get a letter, you know, it's gotta have been there for 90 days or 60 days depending on the bank. And, and so there's all these ways, for the average person it's very difficult to commit fraud. The average guy that works at Walmart and makes $60,000 a year and he's been there for five years and he's saved his deposit, like, it's very, that's really the guy that those transactions are set up for. To borrow a mortgage from Bank of America, that's the guy they're looking for.

   9. LFLex Fridman3:24

      So to commit fraud in this space you had to misrepresent some aspect of your identity, of how much you're worth, how much money you have, this kind of stuff?

   10. MCMatthew Cox3:33

       Right. You have to be able to, to lie to the bank. A- anytime you lie to the bank you've committed fraud. And it's funny, when I was, you know, doing it I would say, "Ah, it's, it's in the gray area." There's no gray area, you're either lying in some capacity or you're not. So it, for instance, with the very first loan I did, I, I whited out, um, my borrower had been 30 days late on her, uh, on her rent. So they're really looking at the last two years. So when y- when you go into the bank and they, most of what they're asking you is a, is a two year window, they're saying, "How long have you been on their job?" They care about two years. And, "How long have you been at your, um, at your residency?" They're looking for two years. Now you could be at three places in two years, that's fine, as long as you consistent- consistently paid for two years. Well she had been in an apartment complex but she'd been 30 days late. Now she caught it up, but she was late. Bank, you know, the bank doesn't want to lend you money if, if you've been 30 days late. So I was a broker and I whited out the 30 day late. I just got rid of it. And my manager is the person that told me to do it. She said, "It'll be fine." And she was right, it was.

   11. LFLex Fridman4:52

       What did it feel like? So that was the first fraudulent action you committed?

   12. MCMatthew Cox4:56

       Yeah. I, I mean, I, you know, I was, I was worried. You know? I always say, you know, I sweated bullets for, you know, four or five days. You know, but I mean, I, I was concerned. And, and I don't know that I was concerned that I had broken the law, uh, I was concerned because I was behind on my, on my truck payment, I was behind on my mortgage. Like I had banked on being a mortgage broker and I'd gone deep, deep behind on all my bills to do this, so in the last minute when this loan isn't gonna close and I have to commit fraud to make that happen, and the idea, my fear was they were gonna figure it out and maybe I'd get fired. You know, I didn't think I was gonna go to jail because my manager assured me, "You're not going to jail." Like they'll, "You'll get fired at, at best." So my concern was they were gonna catch it and I'd get fired and I wouldn't get paid. Like I needed that money so bad.

   13. LFLex Fridman5:56

       So maybe paint the picture here. Where were you working? Who was the manager?

   14. MCMatthew Cox6:00

       The manager wa- it's funny 'cause I, I...I don't think I ever really mentioned this. It, her name was, uh, Gretchen Zayas. She eventually, I don't mind saying it, but she eventually got, ended up going to jail for fraud.

   15. LFLex Fridman6:11

       Mm.

   16. MCMatthew Cox6:11

       Uh, her name was Gretchen Zayas and she was the manager, I was working for a company called Eagle Lending and it was in Tampa. And I, this was, like, my first month. So it was my very first deal, three or four weeks into it, i- into that first month. And I walk in, I put the file in, in front of my manager. She looks through everything, you know, "Oh, great. Good, good." And put this one piece of paper over here.

   17. LFLex Fridman6:39

       Mm-hmm.

   18. MCMatthew Cox6:39

       And sat there. And then when she was done, I said, "Uh, what's, what's going on?" She goes, "Perfect. File's perfect." She goes, "But your borrower's 30 days late on her rent." And she says that that's, "It's done." She's like, "That's a deal killer." And I was like, "Oh my gosh," you know, "What do I do?" And I remember she pulled out a wi- thing of Wite-Out. Remember the Wite-Out? Not the sticks, but the one, ch-ch-ch.

   19. LFLex Fridman7:00

       Mm-hmm, yeah.

   20. MCMatthew Cox7:01

       And she started going, "Ch-ch-ch-ch-ch-ch." And I was like, "What?" She goes, "If I was you..." And she handed, she said, "I'd white it out, make a copy, stick it back in the file."

   21. LFLex Fridman7:09

       Yeah.

   22. MCMatthew Cox7:09

       She said, "It'll be fine." And I went, "I could..." I was like, "That, that's fraud. I could go to jail." And she goes, and she was like, "It's, they're never gonna catch it." She said, "Look, I, we do stuff all, I do this stuff all the time." She said, "They're not gonna catch it. And nobody's calling the FBI." She goes, "The worst case that ha- that ha- worst case scenario, if underwriting catches it, then they'll fire you. That's it. Nobody's calling, you're not going to jail." And I was, you know, and I trusted her. I was like, "Okay." And so we, I, I did what she said, I stuck it in the file, and I mean, li- like I said, for fi- four or five days I was like, "Oh my God, I'm so scared."

   23. LFLex Fridman7:45

       How old were you at this point?

   24. MCMatthew Cox7:46

       Probably 29. I think I was 29.

   25. LFLex Fridman7:49

       Okay.

   26. MCMatthew Cox7:49

       You know, like, I had gone to college and so many things had not worked out. You know, I got a degree in fine arts. It's not, it's not a, uh, there's not a lot of people looking for anyone with a fine arts degree. And, uh, you know, I tried my, I tried to be a, uh, tried to be a, an insurance adjuster, tried that for about a year, year and a half. That didn't work out. Uh, ended up, ended up working construction for a few years and, you know. So finally the girl I was dating said, "You gotta be a mortgage broker." You know, she's just, had just started as a mortgage, in the mortgage industry.

   27. LFLex Fridman8:27

       Mm-hmm.

   28. MCMatthew Cox8:27

       And she was like, "You have to do this. Like, you were born to do this. This is perfect for you."

   29. LFLex Fridman8:31

       What did she see in you?

   30. MCMatthew Cox8:32

       She said, "It just, you're a salesman." And I was like, 'cause I was like, you know, I barely balanced my checkbook. Like, "I don't know, I don't know anything about numbers." And she's like, "It has nothing to do with that. It's sales. It's putting together deals. You know, you're good at that. You're good at negotiating. You're, you know, you're a natural sales- salesman." And I figured I'd, I needed to try something.
3. 16:47 – 50:33

   Creating fake people

   1. LFLex Fridman16:47

      One of the things you did, you talked about creating synthetic people.

   2. MCMatthew Cox16:51

      Right.

   3. LFLex Fridman16:51

      Meaning, uh, cr- (laughs) creating fake identities. What does, what does it take to do that, to do that well?

   4. MCMatthew Cox16:57

      So your credit profile is made up of your, you know, your- your a- your name, date of birth, your address, and you know, your Social Security number.

   5. LFLex Fridman17:07

      Mm-hmm.

   6. MCMatthew Cox17:08

      And, you know, those are the kind of ... You know, and then there's other things, where you work, that sort of thing. But what people don't realize is there's so many people out there that think that the credit bureaus already know who you are.

   7. LFLex Fridman17:24

      Mm-hmm.

   8. MCMatthew Cox17:24

      Right? But the truth is, the first time the credit bureau has ever heard about you was when you told them. The first time you applied for a credit card, you cr- they created a credit profile at that moment. Prior to that, they had no idea. So the first time you apply, you give them your- your full name, date of birth, Social Security number, and your address. And they create a credit profile and they say, "Hey, no record found of this person. He has no credit, nothing. Probably got denied." Well, what I realized through the course of ... 'Cause e- eventually I end up leaving that one company and I opened my own mortgage company.

   9. LFLex Fridman18:02

      Mm-hmm.

   10. MCMatthew Cox18:03

       When I opened that mortgage company-I was, I was on the inside. Does that make sense? Like, I wasn't a, I wasn't just a broker that was sitting out with everybody else and would periodically come in and ask questions, or would call underwriting and, but really didn't understand what was happening and what, exactly what the underwriting guidelines were. Now, I was actually talking to the underwriters, and you're, you're talking to the, um, to the owners of the lending institutions and the banks, and you're talking to all of the account executives. And now it wasn't just Eagle Lending I was talking to. There were 40 different account executives coming in on a weekly basis trying to get us to sign up with their lender.

   11. LFLex Fridman18:44

       Mm-hmm.

   12. MCMatthew Cox18:45

       And they're on the inside telling you, coming in, showing you, uh, programs and saying, "Look, if your borrower is, you know, self-employed-

   13. LFLex Fridman18:55

       Mm-hmm.

   14. MCMatthew Cox18:55

       ...we don't ask for this or this. We just ask for them to say they're self-employed." Like liar loans. You've, you've heard the term liar loans?

   15. LFLex Fridman19:03

       Nope.

   16. MCMatthew Cox19:03

       Okay. Um, or no-doc loans, where they don't ask for any documentation. If he's got over, like, let's say, a 700 credit score and he says he's been a plumber and he works for himself then, and he's got over a 700 credit score, he just has to say he's worked for himself for over two years and...

   17. LFLex Fridman19:17

       They don't ask any other questions.

   18. MCMatthew Cox19:18

       They don't ask for any documentation. He's got the money in the bank, he's got a 700 credit score, says he's been on the job for two years, he's self-employed, we're gonna raise his interest rate by 1%. And, and he's got ... You know, and that's it. He's, he's got the loan. So, but you start to, you start to know how things work, because I hired a bunch of brokers to work underneath me, and when they would get caught, I would get the phone call. So I get the phone call from the owner of a bank or a, a lending institute, you know, a lender, and that lender says, "Hey, Matt, we got a problem." I'm like, "What's up?" He's like, he's like, "Listen, uh, we, we caught a, a fake W-2." I'm like, "What do you, what do you mean?" "Yeah, your, your broker so-and-so sent us a file and this person had ... There's two fake W-2s and we're assuming the pay stubs are fake." And I'm like, "Are you serious? Well, how, how did you even catch that?" And they go, "Oh, well, here's what we did. We checked with sunbiz.com," you know, sunbiz.gov, which is the Secretary of State's website that registers corporations, "and we checked, and the tax ID number didn't match." And I, now I know every W-2 has to have a matching, uh, tax ID number for whatever corporation, uh, issued it.

   19. LFLex Fridman20:34

       So, there's a sequence of checks they do to detect fraud on different documents like W-2s?

   20. MCMatthew Cox20:38

       Right.

   21. LFLex Fridman20:39

       And then you're s- slowly learning-

   22. MCMatthew Cox20:40

       Slowly, yeah, exactly.

   23. LFLex Fridman20:41

       ...what's the process for detecting it. (laughs)

   24. MCMatthew Cox20:43

       I mean, I had a pretty good understanding anyway.

   25. LFLex Fridman20:45

       Yeah.

   26. MCMatthew Cox20:45

       But so I'm starting to learn that.

   27. LFLex Fridman20:47

       Just common sense understanding, yeah.

   28. MCMatthew Cox20:48

       So I'm putting these things together, and I remember one time I had a woman come in, and she came in and she had perfect credit. She had like 750 credit scores. I mean, it was perfect. And she came in and, uh, one of the brokers came in and said, "Hey, man," he goes like, "Can I show you something?" I was like, "Yeah, what's up?" He, he goes, "Look." He said, "I've got this, this woman's W-2s here." I said, "Okay." I looked at them and he goes, "Here's her credit report." And he goes, "Here's the, you know, application. This is the, this is the Social Security number." I went, "All right." And he said, "This is the Social Security number on the W-2." And I went, "Okay." Keep in mind, you go to get a car loan or credit card, they never ask for these things. So, and he was like, uh ... I'm really shocked he even noticed it. I probably might not have even caught it, but he ... They were different. And I went, "Really?" And he goes, "Yeah." He said, um, "So I, I did ... You know, she just brought them in, you know, she's here." And I was like, "Oh, bring her in here." So she came in, sat down. I said, "Listen, here's what we just found." And she was like, "Oh, okay, you know what? I don't want the loan. I, I just ..." I go, "No, no, no, no." I said, "Listen, you're getting the loan. You got a 750 credit score. Like, I don't care what we have to do, we're getting you the loan. I just want to know what's going on.

   29. LFLex Fridman21:57

       Mm-hmm.

   30. MCMatthew Cox21:58

       How are, how did you even, how did you get 750 credit scores under this Social Security number when clearly this is your real Social Security number? You've been working for this company for 10 years-
4. 50:33 – 1:07:24

   Arrested by FBI

   1. MCMatthew Cox50:33

   2. LFLex Fridman50:33

      You mentioned right before, uh, telling the story of this elaborate scam that you were on federal probation. How did that happen?

   3. MCMatthew Cox50:41

      So, I mentioned that I, I own the mortgage company.

   4. LFLex Fridman50:43

      Yes.

   5. MCMatthew Cox50:43

      Right? So I, I had started a mortgage company. I had maybe a dozen guys working for me. And, and there was fraud, you know. Like, I would say it wasn't all fraud, but whatever, 60, 70% of it was fraud that was going in there. And from the outside of that, that business, it looked very legitimate. You know, we were an FHA approved lender, we were a VA approved lender, we did conventional, probably signed up with 40 or 50 subprime lenders. Um, but, but there was a considerable amount of fraud and, you know, and it kept getting, you know, it- it became a game, right? You know, it... You start, you start... I started getting just more and more creative. Like I, like I said, every time I would get away with something, like, you become emboldened by it. It's like, "Nice." You know, like, "Hey, the underwriter's looking for this and looking for this," and you sit there and go, "Man, so then she's..." You know, "That's... What am I gonna do? What am I... You know what we could do? We could create our, create our own bank. What? Yeah! Here's what we're gonna do. We're gonna go on..." Like, how do they know if this bank exists? Th- these people are in California or they're in New York. Like, they don't know. So what we're gonna do is we're gonna go online, and keep in mind this is 2000, you know, this is 2000, 2001. Like, this is... The internet's in its infancy still, right? So we figure out, and I remember GoDaddy I think had just come up with a site where you could build your own website. Like, how cool is that? So I go online with a buddy of mine and we create something called the Bank of Ybor. You know, we cut and pasted things that we liked from other banks and we got a 1-800 number you could call, or a 1-86 number, whatever it was, and you could call it and it would go to a voicemail. And so we set up this bank, and then I ended up making bank statements, which by this point I already had been making bank statements to, to prove someone has their down payment, 'cause a lot of times people, they have good enough credit to borrow, 95% or 90%, but they don't have their down payment. So we'd raise the purchase price high enough to cover their 5 or 10% down payment, and we would bring their down payment for them, or we'd have the owner of the house bring the down payment for them, and then we would have a check cut out of the closing statement to a construction company that I owned and we'd get our money back. So, they get into the house for 100% financing or 110%, some of them turned into 130, we wanna pay off their car, give them an incentive to sign. Um, they don't ha- still won't have the money to buy it. So we're doing all kinds of insane things. Well, at some point, remember Gretchen Zeias, my, um, my old manager?

   6. LFLex Fridman53:32

      Yeah. The original.

   7. MCMatthew Cox53:33

      Yes.

   8. LFLex Fridman53:33

      The OG.

   9. MCMatthew Cox53:34

      She came and worked for me for a short period of time and then she and her husband went and opened their own mortgage company, which you should've known it was gonna be fraudulent from the get-go because it was called Creative Financing. It was, it was, yeah, Cre- C- uh, CFM, Creative Finance, no, Creative... (laughs) I was...

   10. LFLex Fridman53:54

       Creative was in the name.

   11. MCMatthew Cox53:55

       Yeah, yeah. Creative was in the name.

   12. LFLex Fridman53:57

       Oh, boy.

   13. MCMatthew Cox53:57

       Um, so-

   14. LFLex Fridman53:59

       That's really on the nose.

   15. MCMatthew Cox54:00

       So she, uh, she's doing very well and, and we became very close, by the way. We're, we'd go on vacation, went to Puerto Rico together. Um, I'm, I got married at the time. I got m- I was married. Our kids, you know, play together. We babysit, we go to each other's parties. We're close. We're good friends. And she's got her own mortgage company. She calls me up periodically and asks me, "Hey, can you make a W-2?" Or, "Hey, can you make me a pay stub?" "Sure, no problem." We're friends. That's what fraudulent friends do. So, you know, if I needed somebody to, to verify rent or verify somebody's, um, rental history or employment-She had cell phones she would answer, that sort of thing, for me. Well, what ended up happening is, um, she gets in trouble. She starts doing fraudulent loans for some guys, you know, and these guys are doing what's called a cashback scam.

   16. LFLex Fridman55:05

       Mm-hmm.

   17. MCMatthew Cox55:05

       So they're, they're getting like a half a million dollar loan on a house that's worth $300,000. So they're getting a, uh, they're buying the house for, whatever, 600,000. It's really only worth 300, 350. But she happened to be in an area where she could get it, the appraisal jacked up. So they, they buy the house, they get $200,000, $300,000 back and, um, it's, it's a, it's a straw man scam, right? It's a cashback straw man scam. So this is a real person that's buying the house. He's got perfect credit, but he's willing, he's willing to let, to ruin his credit to get a couple of hundred thousand in his pocket. So he never has any intentions. So it's not a synthetic identity, it's not a stolen identity, it's a straw man. He's a fake, kind of a, not a fake person, but he's just a straw man. He's a stand-in. So he stands in, he signs the paperwork, he buys, buys the house. They end up getting 200, 300,000. Well, this guy buys like five houses. So it's 2, $3 million. They've lost 500, 600, 600, $700,000 and these guys never even make the first payment. They just let them go into foreclosure. So the bank immediately investigates and realizes this is fraud. So the FBI comes in, they grab Pete and Gretchen. She has to hire an attorney, of course, and she doesn't get thrown in jail or anything. They just come to their office and they, they tell them they're investigating them, they know what's going on and they, they want to talk to... They're like, "Well, look, we want to talk to you and you're going to be indicted." "Okay." So she comes to me... Well, actually, Pete came to me and said, "Look, man, can you refinance our house and get us 75,000 out to pay our attorney?" I said, "No problem." Um, Gretchen gives me W-2s, pay subs, fake, the whole thing's fake. I get her, I refinance, I get a second mortgage on her house, $75,000, they pay their attorney. Their attorney immediately says, "You need to wear a wire on this guy. He just got you $75,000." You know, "I don't know how you got $75,000," but the attorney knows something's wrong 'cause the attorney's like, they just, "Your whole mortgage company was just shut down. There's no way you could borrow $75,000." So he's like, "This, this guy's doing fraudulent stuff," and she says, "Yes, of course he is." And he says, "You need to work with the FBI, wear a wire against this guy." So she calls me one day and says, "Listen, I gotta talk to you. The FBI's asking questions about you." And I go, "What?" And she goes, "Yeah." And I was like, "Um, meet me at the pizza place down the street." So, you know, don't come into my office 'cause everybody knows she's been indicted. Like, everybody in her office quit-

   18. LFLex Fridman57:29

       Mm-hmm.

   19. MCMatthew Cox57:29

       ... when the FBI... If the FBI shows up and gives you a business card and announces they're the FBI, everybody quits. So I said, "Do not have, do not, don't, don't come here 'cause they already know, they're already concerned." So I go and I meet her and Pete and we sit down at the, uh, at a restaurant, you know, a little pizzeria. And I sit down and she starts telling me that the FBI's asking questions about me and I'm like, "Well, what are you talking about? What are they asking?" She goes, "Look, they came in, they took all our files," and like, I was like, "I don't know any of this." I'm like, "When did this happen?" She's like, "Yeah, a couple of weeks ago and they, they, and they have some of your files." 'Cause I had closed several loans for my wife at the time. We were buying rental properties. My wife didn't have a job. So there, there, it's all fraud, but I couldn't close... I could not close those loans in, at my mortgage company because I owned the property, so I'm selling those properties. I bought properties, renovated them and sold them to my wife to get around something called seasoning. Seasoning says you have to wait six months to a year to refinance at the market value. Otherwise, if you wanna refinance, that's fine, but you have to refinance at the price you purchased the property at. But I bought these properties for 80 or 100,000, renovated them, sold them for 200, 300,000 to my, my wife who got a very, didn't even get a big mortgage. We were just trying to kind of get around a, a, um, a guideline. So, but my wife was not working and I provided W-2s and pay subs. So when she says all this, she says, "Yeah, they're looking at, at your, the loans you gave me, at, at your wife's loans." And I went, "Oh my God." I said, "Well, you didn't tell them that the W-2s were fake, did you? You didn't tell them the pay subs were fake, did you? You didn't tell them that the down payments were... You didn't tell them that we were married, did you?" I mean, just absolutely buried myself.

   20. LFLex Fridman59:26

       Yeah.

   21. MCMatthew Cox59:27

       And as I'm telling her this, I was like, oh, I, I, I, I was like, I, I kinda caught myself and I went, "Okay, wait, wait, wait a minute. Look. Okay, here's what you're gonna tell them. You're going to tell them you never met her. She called on the phone." Like, I start trying to devise a plan that will answer their questions without getting my wife in trouble or them in trouble and if nobody cooperates, the whole thing should shut down. You know, they st- it doesn't go anywhere. There's no way, there's nowhere for them to go. Everybody just kind of stonewalls them. So as I'm saying all this, Gretchen says, "Matt, we can't lie to the FBI." And I go, "What are you talking about? You're already lying to the FBI. I mean, you, you, you know, you, you've been lying to the FBI. I mean, I just refinanced your house." And before I can really say anything, Pete jumps up, her husband stands up and he says, "We've never lied to the FBI. We may not have told them everything, but we've never lied." And I thought like, "What, what, who? Who are you talking to?" Like, I know that's not true, so you're not saying that for my benefit. So I was just, I kind of look at him and I'm like, "What?" And I just, I remember looking down and, and this may mean nothing, but both of their cell phones were right next to me.

   22. LFLex Fridman1:00:40

       Mm-hmm.

   23. MCMatthew Cox1:00:41

       Right? And I remember-... they were probably just wearing wires. But I just remember thinking, "Those cell phones are microphones."

   24. LFLex Fridman1:00:48

       (laughs) Yeah.

   25. MCMatthew Cox1:00:49

       They probably weren't, but I remember thinking, "Oh, wow," and I just, I looked at her and I went, "Wow." And I said, "Well, I hope you're gonna get something for this," and she immediately starts crying, and she says, "Matt, I'm sorry. I, I have a kid. I can't go to jail."

   26. LFLex Fridman1:01:07

       Did you have kids at that point?

   27. MCMatthew Cox1:01:08

       Yeah, I had, like... I have a kid. Like, I have a kid. And I was like, "Wow," I... "Wow."

   28. LFLex Fridman1:01:14

       What have you learned about friendship from that, like loyalty?

   29. MCMatthew Cox1:01:18

       Oh, yeah, there's no... There's... That's, uh... That's... It's sweet.

   30. LFLex Fridman1:01:21

       That must've hurt.
5. 1:07:24 – 1:29:41

   Omerta: Code of silence

   1. MCMatthew Cox1:07:24

   2. LFLex Fridman1:07:24

      So are there people in this world you trusted or you still trust?

   3. MCMatthew Cox1:07:30

      I, you know, the- the problem is, eventually I cooperate. And at the time I didn't want to cooperate. I didn't believe in cooperation. But after seeing how many people cooperate and the way the system is set up, I think that my understanding of loyalty is vastly more realistic now. And I think that if you're committing crime, if- if you're ... L- absolutely, like the things I did, I did a bunch of scumbag things, you know? I mean, I'm not killing people, but I'm doing scumbag things. I'm lying, cheating, stealing. That, I'm a thief, you know? You boil down to it, that's what I am. So you can't go around behaving like a scumbag, dealing with scumbags, and then expect those same scumbags to suddenly abide by some kind of a street code and not roll over on you, you know? And it does happen, but it's- it's like in the, it's in the 90 percentile of people that cooperate, 90-something percent. And people cooperate when they're not even looking at any real time. So if you're looking at 30 years and- and especially after going to prison. You go to prison, and it's like, "This guy's a standup guy over here. He got 30 years. He could have cooperated against all of his co-defendants, but he didn't." Nobody comes to see him. His wife divorced him. You know, his kids ended up in foster care. His, you know, his- his friends are- are- are cleaning out his house. Nobody puts money on his- on his- his books. Nobody comes to see him. Nobody answers his phone, nothing. He took 30 years. Most of those guys turned around, they end up getting indicted for other things years later. They cooperate. And the best thing this guy's got going for him is that he can walk around and say, "Oh, he's a standup guy. That guy's going to the same halfway house as me. He's probably, he's gonna do 30 years where I'm gonna do 10."

   4. LFLex Fridman1:09:39

      A standup guy meaning he never snitched.

   5. MCMatthew Cox1:09:41

      Right.

   6. LFLex Fridman1:09:42

      And so everybody's seeing this example and saying, "Well, I'm going to snitch then." But it- it sounds like what people are doing is they're, uh, signaling, virtue signaling. Like they are, they would never snitch and actually do secretly.

   7. MCMatthew Cox1:09:59

      I mean, what is it? I- I remember I talked to one of the COs at the prison one time, and he said, uh, he said ... I said, "Shit." I said, "50% of the guys here snitched." He goes, "It's more than that." He said, "But listen," he goes, "100% of them are lying about it." He said, "So you'll ..." He goes, "There's nobody here that's gonna tell you they- they snitched. Nobody." So there's guys, tons of, tons of them that cooperate. If 80, 90% of- of, um, defendants cooperate, you know, you start doing the math, and you, if you- you ask 10 guys in prison, all of them say, "I didn't- I didn't cooperate. I didn't cooperate. I didn't cooperate." Like, okay, you ask 100. "I didn't cooperate." Like, nobody's gonna say, "I cooperated."

   8. LFLex Fridman1:10:38

      Does that break your heart a little bit, that people backstab each other like this?

   9. MCMatthew Cox1:10:44

      It- it does. It does, but ... (sighs) You know, but I have such a low opinion of people. You know what I'm saying? Like, I don't expect ... It- it's not that I- I don't like people, it's that I just don't expect anything of them, you know? I don't expect you to look out for me, you know? There was a time when I did. I thought, "I look out for you, you should look out for me," but I just don't expect that anymore.

   10. LFLex Fridman1:11:06

       See, but I think humanity flourishes because there is a lot of people out there that do the thing that is difficult to do in terms of integrity.

   11. MCMatthew Cox1:11:17

       That may be, but these- these aren't people with integrity. These are criminals. If these were decent human beings, and all of them will tell you, "Well, why'd you do that?" "Oh, you know, I was a drug addict," or, "I- I needed the money." Well, if you were a- if you were a decent human being, you would have cl- gotten off the drugs. You would have gone and gotten three jobs. You can work 80 hours a week. I've done it. You can work 84, 85, 80. You can work 90 hours a week. You can do that. "Oh, I did it for my kids." No, you're lazy. You could have worked three jobs for your kids. Instead, you decided to sell methamphetamine. "Well, I was, I was addicted." You could have gotten off meth. It wasn't important. It was the easy way out. You're not someone with integrity. So for you to sit there and say, "Hey, I'm gonna act like a scumbag, but now I got caught or you got caught and I don't want you to tell on me," well, you're a guy that robs banks. You stick guns in people's faces. You kidnap people. You torture people. You sell drugs. You're not, you're not a moral, ethical person, but you want, you want everybody else to hold up to some ethical code while- while you're robbing grandma. That's not right. Like, you know, so you know, I- I get, I get the whole Omerta code, you know, and there was a mo- there was a time when I was, you know, delusional en- enough to believe that. But, you know, after you go, after going through it, no. A- and after going through it multiple times, no.

   12. LFLex Fridman1:12:46

       I have to really think about that, and I re- deeply appreciate your honesty on this.

   13. MCMatthew Cox1:12:52

       (laughs) So ... Right.

   14. LFLex Fridman1:12:54

       'Cause it's, I- I think, um ... I mean...There's all kinds of criminals in this world, and they all have all kinds of stories. And, uh, your story is one of, uh, I don't know if it came from desperation versus a love of this kind of game, right? Like, it, it wasn't part of it an attraction to the, the creative aspect of this? Of breaking the rules when nobody else can, and you figure out a way to do it?

   15. MCMatthew Cox1:13:37

       I think, I think initially it was I needed the money.

   16. LFLex Fridman1:13:42

       Mm-hmm.

   17. MCMatthew Cox1:13:42

       Like that's the first thing, you know? You, you say, "Oh, okay. Well, I need..." And if you ask most guys, "Oh, well man, I needed the money." You need the money. But, and then I, I, I definitely needed the money. But then you get $50,000 in your bank, and then you get 100, and then it's 200, and then it's half a million, and then it's a million. And what the hell are you still committing fraud for? You've got half a million or a million dollars in the bank, or worth of real estate, or you've, you're making $5,000, $10,000 a month just in rental income. Why are you still committing fraud? So it turned, I think it morphs into the creativity in, in part for me. And, and two, it was a chance for me to prove to everybody how smart I was. You know? I mean, it was done out of desperation initially, and then it just turned into pure narcissistic arrogance. "Look at me. Look at how I can do things that nobody else can do. Look how smart I am. I just walked into Bank of America, handed them seven documents that were all fraudulent and they cut me a check for $250,000." Like, "Wow, I'm amazing." You know? And guess what? They're never gonna get their check, and they, they won't know, even know where to start to try and find the person because they're looking for a phantom. So, you know, and you feel great. I felt great. I used to say, "I, I felt like, I felt like James Bond. I felt like 007." It was amazing. And, you know, and it, it did, it feeded my need to feel important, you know? Even if it, it, it was, even if that was a lie, 'cause all that success was just a lie.

   18. LFLex Fridman1:15:29

       Well, no. You were good at it.

   19. MCMatthew Cox1:15:31

       I was good at it, but it was, it's not-

   20. LFLex Fridman1:15:34

       It was illegal.

   21. MCMatthew Cox1:15:35

       ... it's not like I'm Elon Musk.

   22. LFLex Fridman1:15:37

       (laughs)

   23. MCMatthew Cox1:15:37

       You know what I'm saying? Like there's, it's not like you're an exce- I'm an exceptional human be- I'm an exceptional human being at a horrific thing, at, at committing fraud. Like-

   24. LFLex Fridman1:15:45

       Well, the question is how many people are getting hurt? Because, uh-

   25. MCMatthew Cox1:15:49

       Initially, the thing is initially, nobody got hurt. That's the thing. Nobody ever lost any money directly. Like I didn't go and say, "Give me $50,000," and I ran off with your money. Like I wasn't doing that, and that was a great justification. But at some point, and we'll get into that, you know, I take off on the run.

   26. LFLex Fridman1:16:08

       Mm-hmm.

   27. MCMatthew Cox1:16:09

       And people do lose money. I, I didn't take that money directly. And for some reason, in my, you know, sick mind or whatever the case may be, that seems like a distinction to me that makes me feel okay. It's that I never said, "Give me 300, give me $10,000," and I ran off with it. But I put people in the position where I damaged the credit, or damaged the, the title to their house, and they had to go get a lawyer to fix that. You know? And, and so that, they had to go pay a lawyer $10,000. So I absolutely caused that person, that I stood... To me, to, "You're a victim and I owe you that money." And it was a shitty thing to do, because even at the time I was like, "Oh, they'll make a couple phone calls. It'll be fine." It wasn't fine. And if I had really put any thought into it at all, I would have known, it, it's gonna, it's gonna really affect these people. And those people had done nothing wrong with the exception of trusting me. They rented me their house, or they owner financed their house. They made the mistake of bumping into me, and now they owe 10,000, $20,000. You know? And, and I'm sure a, a ton of anguish.

   28. LFLex Fridman1:17:28

       So what happened when you were g- caught that first time?

   29. MCMatthew Cox1:17:32

       So I, I was caught. I got three years probation, you know? I took the probation, which is-

   30. LFLex Fridman1:17:39

       What does that involve?

Episode duration: 6:00:53