For failed founders, the worst consequences used to be ignominy and poverty. The Biden administration is intent on adding prison time to that list. The US Department of Justice has charged two former executives of the failed start-up MoviePass with securities fraud. The ethos of so-called “hustle culture” was celebrated in the go-go noughties with such zingers as “fake it till you make it” and “move fast and break things”. The collapse of the easy money economy and the advent of a more aggressive administration in Washington means business moguls suddenly need to watch their mouths.The government alleged MoviePass knew that offering all-you-can-watch cinema movies for $9.95 per month was not viable, but gave a different impression in interviews, press releases and securities filings. Lawyers for one defendant, Ted Farnsworth, said he was confident he acted in good faith and would be vindicated.The charges come after the high-profile convictions of Trevor Milton of Nikola and Elizabeth Holmes of Theranos. The pair founded a hydrogen truckmaker and a blood test company respectively. Both were charged with lying to investors about business prospects.Criminal securities fraud is, however, very hard to prove. Prosecutors must show that executives knew they were making false claims and that investors relied on the information. A common defence is that courts have not criminalised so-called “puffery”. That means executives can be broadly optimistic about their businesses in ways that should not mislead investors. Milton’s lawyers vainly explained in court papers, “at worst, Mr Milton’s description of the Badger prototype as a ‘real truck’ able to ‘whoop’ a competitor represents Mr Milton’s subjective opinion”. The DoJ will allege that MoviePass executives made precise statements about the company’s business model, its revenue streams and capabilities that were categorically untrue. These were relied upon by public market investors, it will say. It would be wrong to second guess US courts. But all investment bubbles appear obvious with hindsight. In a bull market, savvy investors should ponder how weak business models and management promises may appear in the cold light of a correction.Our popular newsletter for premium subscribers is published twice weekly. On Wednesday we analyse a hot topic from a world financial centre. On Friday we dissect the week’s big themes. Please sign up here.