Heres the way I understand it as a child could understand.

You are google. I am your friend who wants to sell lemonade.

You have invested in my stand and own a piece. You propose a deal, You'll buy $11 of lemonade from me every week.

Does my stand look like it sells way more lemonade, than it would in reality? And since you own a piece, your own piece has appreciated. You ran the numbers and that spending of yours helps appreciate it considerably more (feel free to plugin the actual spaces-google numbers here and change the analogy).

Are the people who invest in my business after you, on its new valuation, aware that you are the one buying most my lemonade? And are you going to keep buying or will stop buying soon (probably as soon as you can unload your investment on strangers). So the fraud and lie as you said, is the behavior is not as real as it looks.

Am I thinking this through wrong, what do you think?

Edit: my definition of fraud is simpler and different from yours. a "lie" need not be there. fraud is any intentional misrepresentation (i.e. misrepresenting income to the public).

Your time is better spent reading up and understanding the definition of fraud, rather than typing up hypothetical stories of what you imagine fraud is.

Fraud is:

* an intentional misrepresentation of fact, whether by words or conduct, by false or misleading allegations, or by concealment of what should have been disclosed;

* made by one person to another;

* with knowledge of its falsity;

* for the purpose of inducing the other person to act, and upon which the other person relies;

* resulting in injury or damage.

Neither the Google/SpaceX situation nor your story constitute fraud. RTFM.