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Comment by DaveExeter | Hacker News Reader

There seems to be a fine line between "clever hack" and "federal indictment".

I don't think "lied about having data on 4 million clients, including making up fake client information, in order to entice JPMorgan Chase to buy her company in 2021 for $175 million" falls in an ethical grey area. It's pretty clearly fraud.

It was an overt fraud, after they started talking to JPM about an acquisition Javice and her Chief Growth Officer paid a NY data science professor $13k to invent a list of customers with real addresses and real sounding high school and college addresses, and then paid for a database of real student email addresses to populate it.

This is after their own software engineer refused to do it on ethical grounds. So they went external for help.

Then 1yr later when JPM tried to run an email campaign using their database only 30% of the emails delivered made it through (apparently they didn’t have time to use their “real” email DB). Additionally a JPM employee noticed the user list Frank employees sent was capped at the exact 1,048,576 maximum number of rows Excel allows on a spreadsheet which made him suspicious.

The odd thing is, that despite the obvious fraud — paying for a fake of your primary asset — she seemed to have no awareness of being at risk of prosecution.

A smarter criminal would have long-since disappeared to some distant non-extradition country, and now have a different identity and face....

> she seemed to have no awareness of being at risk of prosecution

A lot of these folks have not regularly been told "no" or seen consequences for screw-ups in their lives. When they do get told "no", they use family connections or wealth to push through anyways. It becomes very easy to forget that certain acts draw attention of a large organization that can actually impose real consequences.

And what’s so crazy is that it seems like not that hard of a thing to actually make?

Like I’m sure the College Board would sell you a similar list and if you really needed to fluff it, maybe some other shady sources.

Classic “only the stupid fraudsters get caught”

Frank tried this. They purchased lists of student emails from ASL Marketing and Enformion to turn over to JPM. Turns out that the majority of those email addresses were nonfunctional, but even more importantly, even those legitimate email addresses just wouldn't open the emails (because presumably since those users had no previous relationship with Frank or JPM they were just treated as spam). That's what made JPM suspicious. Those emails had an open rate that was > an order of magnitude lower than previous JPM email campaigns.

Yeah but this [0] exists and a good fraudster goes “Hey, I’m an up and coming entrepreneur who is about to cash out and I want to give out some scholarships. Can my foundation buy access to your list please?” Then you spend like $1mn tops on the actual best list of high school emails in the country, give out like $5mn in actual scholarships, and get unlimited love and attention from the kids whose life you changed. Plus you stay rich and don’t go to jail. Hell, maybe you even subtly market Frank in the scholarship emails (Hi, I’m the founder of Frank and want to give back to students more directly…) and your user base actually grows!

[0]* Student Search Service™ Student Search Service is a free, optional service that helps students start a conversation with colleges and scholarship organizations. If students choose to participate in Student Search Service, they agree to share their name, address, college interest, and Student Data Questionnaire responses with colleges, universities, and nonprofit scholarship and educational programs. This information is used for recruitment, scholarship opportunities, and college planning outreach. College Board does not sell student information; however, qualified colleges, universities, nonprofit scholarship services, and nonprofit educational organizations do pay a license fee to use this information to recruit students and provide opportunities in connection with educational or scholarship programs. These license fees are reinvested in our nonprofit mission. For example, these organizations must sign a strict license agreement that outlines how student information can be used. College Board maintains a direct relationship with, and oversight of, all organizations using this student information and monitors the use of student information by licensed organizations. Students can opt out of Student Search Service at any time. More information about Student Search Service.*

They did buy such a DB but the indictment said they didn't get it in time to add the real emails to their fake list. So that's not exactly accurate. Those email lists are real but they are still mostly useless.

Is this for real? Wow. They sold a list they bought for $13K for millions?

I am surprised JPM didn't do proper diligence.

There are a lot of surprises here. I'm surprised this wasn't settled confidentially out of court, since Javice presumably doesn't want to go to prison and JPM doesn't want all this publicity as the bank that paid 9 figures for a fake excel sheet they were gonna use to spam people.

Don't get me wrong, I think it's a good thing that this fraud will be punished... I'm just surprised, either Javice is incredibly stupid/arrogant or someone in JPM was really mad and wanted to press the nuclear button, because a "renegotiation" after a "record keeping error" would have left both parties a lot better off.

She sued them first! They would have probably agreed to settle things quietly. Nope, she wanted them to cover (all!) her legal expenses associated with the internal investigation.[0]

[0] https://assets.bwbx.io/documents/users/iqjWHBFdfxIU/r_2purB7...

Yep she also denied it for months and made up excuses even though they gave her plenty of opportunities to admit it

She deserves jail and her lawyers will be dumb to ask for anything but plea

Allegedly

In my opinion.

I think people can get so excited about being a unicorn they either forget or don’t bother to learn what is fraud and what it isn’t.

If you make up your user list and say you have x million when you don’t, that’s fraud.

I hope Dimon is being sufficiently humbled by the complete lack of diligence that was done before the acquisition because it apparently took very little time after to discover what they did.

He’s doing just fine, he found his therapeutic outlet of torturing employees with RTO policies.

What? Where's the fine line here? "Oops, I accidentally faked 95% of my userbase for a 9 figure buyout, could have happened to anyone"?

This was an attempt to defraud a massive company for hundreds of millions of dollars. The line is in rearview mirror and probably hidden by the curvature of the earth at that point.

20/20 burn

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