Former Startup CEO Charged in $175M Fraud

Wow. So it seems there are two key moments in the fraud.

First, while shopping the company, the CEO represents to potential suitor JP Morgan that they have 4.25M “users”. JPMC bites and asks for proof eg during diligence, and so CEO asks a Dir Eng to fake it. They refuse. So she gets a contractor to build it, sends it through a “vendor”, and the deal goes through.

I think this dataset must be de-identified randomly-generated junk, something like signup dates and fake IPs, because then theres a second fraud: Post acquisition, JPMC starts asking “hey about all those users we paid for, we’d like to market to them now”, and now CEO is in a bind because she needs names and emails. So she commits a second forgery, purchasing a list of 4.5M (name, email) records from a data broker.

Outrageously brazen if proven. I wonder if at any point while the deal was going through, this founder knew this house of cards would someday fall apart.. As usual, you think, “what on earth was the plan?!”

Wow, and this is all while two lawsuits are in the works, I wonder what this indictment will do to those?

  1. JPMorgan Chase sues Charlie Javice - [pdf][1]
  2. Charlie Javice countersues JPMorgan Chase - [pdf][2]

[1]: https://content.fortune.com/wp-content/uploads/2023/01/Compl... [2]: https://www.courtlistener.com/docket/66678711/10/jpmorgan-ch...

Bit of HN context: https://news.ycombinator.com/item?id=34354334

archive.org seems to side with the story telling of the Founder's counter-claim? January 2021 https://web.archive.org/web/20210128191225/https://withfrank... "We've helped over 350,000 people access financial aid resources" and https://web.archive.org/web/20210222193947/https://withfrank... February "4.25 Million students trust Frank." ... at any rate can't say the due diligence team did a brilliant job there... I mean they didn't bother to look at archive.org?