Frank Founder Javice Charged With Defrauding JPMorgan (bloomberglaw.com) 43
Frank founder Charlie Javice was charged with fraud in the $175 million sale of her college financial planning site to JPMorgan Chase. The charges include conspiracy, wire fraud, bank fraud and securities fraud. From a report: JPMorgan, which acquired Frank in 2021, sued Javice and another executive, Olivier Amar, in federal court in Delaware in December, alleging they used fake customer accounts to lead the bank into completing the deal by vastly inflating the number of people using her site.
Everyone involved in this is a ghoul (Score:5, Insightful)
This is the kind of market distortion you get when something as basic as educating the next generation becomes a for profit business. There's a reason we created a public education system. As jobs became more complex due to technology more education was needed. From grade school to high school to college.
Fun fact for Gen X, there's going to be a severe doctor shortage in your 60s when you need them most. Many will die of completely treatable conditions for lack of access to basic care because we refuse to train doctors. And you won't be flying overseas to a country with a proper education system, what with the pilot shortage for the same reason...
Re:Everyone involved in this is a ghoul (Score:5, Interesting)
Right you are. JPMorgan wanted this to be overvalued, and carefully didn't check the accounts. There have been other cases of this recently I have seen, one involving GoldmanSachs the company most knowledgeable about scams since they operate on both sides of that table.
It isn't that hard, nor take that much in the way of resources, especially in the context of nine figure deal. You get some junior associate to pull 100 accounts at random, and manually verify that they are valid by checking the contact info. That's it. Total cost - 1/10 of that associate's annual salary if they can only check four a day (they should be able to do much better than that).
That JPMorgan did not bother with that due diligence is because they did not want to know. If you know anything about tech start-ups you must be aware that padding of their user numbers should be the default assumption. It must be proven that that is not the case before dollars change hands.
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I am persuaded.
JPMorgan presumably bought it because they wanted a fresh company to put in their frothy portfolio in this space, and they did not care about the details except it had the right kind of frothy look. The paperwork and effort to close this deal alone cost 6 figures, before getting to the purchase price, and they did not want to spend 2% of that to figure out what they were actually buying because they did not want to be told it was frothy.
If it were only 75% froth, they might have been able to
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There are plenty of idiots running giant companies.
Re:Everyone involved in this is a ghoul (Score:5, Insightful)
Fun fact for Gen X, there's going to be a severe doctor shortage in your 60s when you need them most. Many will die of completely treatable conditions for lack of access to basic care because we refuse to train doctors. And you won't be flying overseas to a country with a proper education system, what with the pilot shortage for the same reason...
We're in for a fun ride all the way around in the coming decades. We turned public education into public babysitting, neglecting the education part in favor of dumbing people down because it makes them more pliable for the politicians. We soak everybody for every cent from the moment their born for everything from healthcare to "real" education so that the big colleges can have multi-million dollar stadiums, while being able to churn out graduates that barely have the reading comprehension of a dog. Nobody is interested in anything other than the pursuit of profit because profit is literally the only thing we're taught to value, and then we wonder why we lag behind in the sciences and why our infrastructure is crumbling around our ears.
Sadly, I don't think we have the capability of turning it around. Maybe we could have back when Reagan came in and started the process of dismantling the country in pursuit of making sure the rich get richer and the poor and middle class keep getting pushed downward. I'm not sure which genius convinced him that destroying your foundation is the best way to keep society healthy long-term, or if it was just MBA mentality before the MBA craze hit the entire rest of the world, but we're watching the consequences unfold right now. It's gonna get a lot uglier too.
What a time to be alive.
I can tell you don't have a kid (Score:3)
No I didn't consider that (Score:2)
Comment removed (Score:5, Insightful)
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Single payer healthcare is only one part of the answer. Also needed is good free public education, including trade schools. But free doesn't mean you can't flunk out. Access to materials should be covered, but not room and board. (I didn't say books, though that's what I was mainly thinking off, because it might be better, or at least cheaper, to have them be pdf or odt documents. Even HTML if it's in a form that can be downloaded and stored locally, for local access.)
That said, that's really what we s
It's actually not that bad yet (Score:3)
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No. BOTH sides are at fault. I have no real doubt that "Frank" acted as described in the summary, because that kind of thing is really easy and profitable. But Chase should have checked. Fine them both. (Well, fine "Frank" and also fine the various folks in the Chase management that approved the deal.) I'm not sure what the exact law is that Chase management should be prosecuted under. Misfeasance would be right, but Chase is only a regulated entity, not a government. Possibly fraud. (Taking a paych
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> we refuse to train doctors
Nope. Family Practice is no longer profitable, the insurance industry has squeezed individual practitioners too hard. People are choosing other specialties or careers. Why would I go into family practice when I can make more money in anesthesia and have my patients be mostly asleep?
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It's a loss leader, except for private practice ... then it's just loss.
Sell your soul, work for the man, keep referrals in house and get your paycheck.
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There is one argument that says that medicine should not be for profit. It certainly should not be only for the profit of a very few aggregators.
My GP just retired. Sold his practice to the local primary care near-monopoly, little by little one company has eaten up their corporate competitors and private practices and is almost the only game in town. I go out of town to see the doctor now. I'm not dealing with unfriendly front office staff or Revenue Management companies that only offers ways to pay and not
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Death of the B2C startups (Score:3)
Back in the day, fake accounts and inflated bullshit user metrics were the basis for a great many sales and billions of dollars changing hands.
If that is going to lead to ugly lawsuits then those companies are going to have to do some more serious accounting and stop fluffing shit up.
Better for everyone if so.
You Can't Steal From Theives. (Score:4, Funny)
We have laws for that. This is America.
Weird Situation (Score:1)
I mean intentionally artificially inflating what you have available for a sale is certainly scummy, basically like selling 10 tons of gold but half of it arrives as lead coated in foil, but also fuck JPMorgan with a rusty sewer pipe.
Not particularly sure who I'd be rooting for in this instance.
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Didn't they buy lots of rocks sold as nickel too?
They seem to have been spending on a lot of nonsense.
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Yup. [entrepreneur.com]
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Alien vs. Predator. Whoever wins, we lose. So root for neither.
Gangster on gangster violence (Score:3)
You'd think JPM would have a sophisticated enough vetting process to detect obvious fraud. Based on available information, the seller appears to be a dirtbag and JPM appears to be guilty of laziness. It will be interesting to see how things unfold in court. I'm guessing JPM isn't that eager to see the dirty laundry aired out and I would imagine the seller has already squirreled the proceeds away somewhere "safe."
So much this^^^^ (Score:3)
JP looks utterly incompetent begging the question "what else don't they know?".
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JPM wants the student loans with no Bankruptcy (Score:1)
JPM wants the student loans with no Bankruptcy
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"Caveat emptor" was always a warning to the buyer, not a proposal for how the seller should act. Fraud has been punished as far back as we have records, though in some periods the buyer was expected to mete out the punishment.
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Seriously? (Score:5, Insightful)
How do you pay $175 MILLION for something and not do basic due diligence? Seriously when I buy a paperclip from amazon I read all the reviews, ask all my friends which one they have, and finally ask myself why do I even need a paperclip when I don't print anything
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Quite possible, he was ex-Goldman Sachs etc.
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I've been that guy. It's usually not a good career move.
Was it the tens of millions we spent on a foreign office so we could hire developers in a country that didn't have many developers?
Or was it the tiny game company we spent 5 million on for a game I completely finished in 3 days over breaks during work hours they thought was going to be the next big thing?
The office one the other execs looked at me like I was a madman for saying anything because it was the boss's pet project.
The game one the other exec
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True. The office was 100% on us. No external fraud. We just hired a real estate person and as bunch of useless local devs who literally never finished a project in 2.5 years before the office was shut down. Roughly $40 million burned.
The game company was a bit fuzzier. I wouldn't say the sellers were fraudulent per we but they certainly weren't super forthcoming and I wasn't on the due diligence team because I'm sure they knew I'd find out in the first 30 seconds they only had an average of 2 active us
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How do you pay $175 MILLION for something and not do basic due diligence? Seriously when I buy a paperclip from amazon I read all the reviews, ask all my friends which one they have, and finally ask myself why do I even need a paperclip when I don't print anything
Well I think the point of the fraud was to deceive the people doing the due diligence.
"Defrauding J.P. Morgan..." (Score:3)
... is like intimidating Al Capone.
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