Want to read Slashdot from your mobile device? Point it at m.slashdot.org and keep reading!

 


Forgot your password?
Close
typodupeerror
×
Businesses United States

Frank Founder Javice Charged With Defrauding JPMorgan (bloomberglaw.com) 43

Posted by msmash from the time-to-face-the-music dept.
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.
This discussion has been archived. No new comments can be posted.

Frank Founder Javice Charged With Defrauding JPMorgan More

Frank Founder Javice Charged With Defrauding JPMorgan

Comments Filter:

  • Everyone involved in this is a ghoul (Score:5, Insightful)

    by rsilvergun ( 571051 ) on Tuesday April 04, 2023 @10:08AM (#63424880)
    JPMorgan massively overvalued the company because they wanted in on soaking desperate kids in need of a college education for access to working class jobs (since the massive influx of H1-Bs, weak labor laws and unions and trade deals favorable to multinationals mean a bachelor's degree is now needed for entry level jobs). Meanwhile the entire company seems to have basically been a pump & dump.

    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)

      by careysub ( 976506 ) on Tuesday April 04, 2023 @11:08AM (#63425066)

      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.

      • 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

      • I can also point you to HP's acquisition of Autonomy. It took less than a year for them to write off billions, and the auditors who should have picked up any problem were fined a tiny amount for failing to do their job.
        There are plenty of idiots running giant companies.

    • Re:Everyone involved in this is a ghoul (Score:5, Insightful)

      by nightflameauto ( 6607976 ) on Tuesday April 04, 2023 @11:41AM (#63425186)

      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 do and while I'm old enough that they got out of college in the last few years I can tell you that public education is rigorous and downright brutal. There's no hand holding or codling going on it's sink or swim. I would regularly wake up around midnight to go to the bathroom and find my kids still studying when they were in high school. Colleges have become intensely competitive because most kids aren't Rich enough to go to college without scholarships and they're a damn few scholarships. Community colle

    • Comment removed (Score:5, Insightful)

      by account_deleted ( 4530225 ) on Tuesday April 04, 2023 @11:50AM (#63425216)
      Comment removed based on user account deletion

      • Re: (Score:2)

        by HiThere ( 15173 )

        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

      • We still have more cardiologists than any other country and we've got enough doctors floating around. The problem is the boomers who have their education paid for by the government are rapidly retiring and because we pulled all the federal and state subsidies that kept tuition low and paid for those educations we're heading for a disaster. We have the same problem with pilots for the same reason. The government paid for it a little more directly, the military trained pilots and sent them off to private empl

    • > 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?

      • 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.

        • 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

    • Comment removed based on user account deletion

  • Death of the B2C startups (Score:3)

    by iAmWaySmarterThanYou ( 10095012 ) on Tuesday April 04, 2023 @10:08AM (#63424884)

    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)

    by zenlessyank ( 748553 ) on Tuesday April 04, 2023 @10:13AM (#63424898)

    We have laws for that. This is America.

  • Weird Situation (Score:1)

    by Anonymous Coward

    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.

  • Gangster on gangster violence (Score:3)

    by Ritz_Just_Ritz ( 883997 ) on Tuesday April 04, 2023 @10:25AM (#63424934)

    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."

  • Seriously? (Score:5, Insightful)

    by backslashdot ( 95548 ) on Tuesday April 04, 2023 @10:31AM (#63424948)

    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

    • Lots of reasons. Laziness ranks high among them. Knowing that the big boss has already decided is another. Incompetence is always a good one, the best people do not usually get these assignments. I was involved in a project based on acquisition years ago, which was an example of the second case. My boss was a member of the group that was sent to England to interview customers of the proposed acquisition. They went to a trade show to talk to customers, most of the team stayed a few minutes and then w

      • 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

        • But in the case of the office and the game, your company actually got the office and the game. In this case, even if all of the accounts were real, the purchase wasn't worth $175M. But then the seller didn't deliver what was agreed. That's the difference. One is stupidity only on the part of the buyer. The other is stupidity on the part of the buyer combined with fraud on the part of the seller.

          • 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

    • 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)

    by Archtech ( 159117 ) on Tuesday April 04, 2023 @10:55AM (#63425020)

    ... is like intimidating Al Capone.

Slashdot Top Deals

If a thing's worth having, it's worth cheating for. -- W.C. Fields

Close