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Charlie Javice convicted of defrauding JPMorgan in $175M startup sale
- jordanb 2y agoThe best and the brightest.
- bb88 2y agoI think this current crop of 20-somethings learned something terrible.
- neilv 2y ago20-somethings didn't invent fraud. (But don't phrase it like that, or they'll argue the point with you, since they think they invented everything. :)
- bb88 2y agoNo, but I don't recall a 20 something committing a $175M fraud before this decade. Not on this scale anyway. Elizabeth Holmes was 31 when she was outed. But most of that scandal was created in her 20's. Sam Bankman-Fried was in his 20s along with his girlfriend Caroline Ellison. Billy MacFarland defrauded investors of $26M for the Fyre festival that famously imploded. Charlie Javice was 29 when she defrauded JPMC with Frank. I'm not saying there 20 year-olds didn't defraud mulit-millions in the previous decades to this. I just don't remember any. And this generation has far too much of their share.
- neilv 2y agoWhat changed? In earlier decades, were nepo babies not as often in a position to do fraud? Or not motivated to do fraud? Or not helped to do fraud?
- bb88 2y agoI don't think people were trusted before the 1990s until they were mid to late thirties. Now it's like VC's throw capital at 20 somethings as if they're wunderkind, when they're not fully mature adults mentally yet. Maybe there was some fraud on Wall Street back then, but those people had more access to capital than others. It's also easy to delude yourself that you deserve all the money -- even if you haven't produced anything of value (Theranos). Or you delude yourself that you're so talented that there's no need for any safeguards (FTX). If there's capital flowing and you're sitting on a pile of cash (which you haven't earned yet only raised), you begin to think you've actually accomplished something when you haven't. And now with crypto, influencers are basically cashing in their popularity. There's so much cash investors have, and TINA -- there is no alternative potentially high yield investments. Before maybe in the 2000s investors would actually, like, you know, put insiders in the company and you know "due diligence" and all that, and not trust the word of a 20-something directly.
- neilv 2y agoThanks, excellent comments.
- IncreasePosts 2y ago100 years ago, this twenty-something fellow committed fraud substantial enough to almost destroy the economy of Portugal and was probably a major motivator for a coup d'etat that happened a year after his fraud was discovered. https://en.wikipedia.org/wiki/Alves_dos_Reis https://en.wikipedia.org/wiki/Alves_dos_Reis
- rdtsc 2y agoSeeing she is still out and able to pay her $2m bail, there will be many who will her story as a success. Unless she ends up prison for a least 10 years, it's not a bad deal - you get to make millions, be famous, be on the cover of magazines, then chill at home while running a youtube channel, or a write a back about your exploits.
- jxjnskkzxxhx 2y agoWait, she's not going to be locked up?
- rdtsc 2y agoShe might be, but so far she is free on a $2 million bail since her 2023 arrest.
- deleted 2y ago[deleted]
- generalpf 2y agoForbes 30 Under 30!
- romellem 2y agoRelated discussion - https://news.ycombinator.com/item?id=35441211 https://news.ycombinator.com/item?id=35441211
- neutered_knot 2y agoPardon inbound
- paxys 2y agoNah she doesn't have the bribe money
- deleted 2y ago[deleted]
- blatantly 2y agoWhy?
- blatantly 2y agoThanks for the downvotes anyone going to say why an arbitrary minion will get a presidential pardon? Even if they bribed. Any bribe is nothing, Trump has Elon.
- deleted 2y ago[deleted]
- jerrygenser 2y agotrevor milton donated $2mm to trumps re-election campaign. he got pardoned. any bribe is not nothing if $2mm gets you off after doing brazen fraud.
- someothherguyy 2y agoMost recently, https://www.axios.com/2025/03/31/trump-pardons-bitmex-crypto-fraud https://www.axios.com/2025/03/31/trump-pardons-bitmex-crypto... More information: https://en.wikipedia.org/wiki/List_of_people_granted_executive_clemency_by_Donald_Trump#Major_beneficiaries https://en.wikipedia.org/wiki/List_of_people_granted_executi...
- skybrian 2y ago
- martythemaniak 2y agoLuckily for her, pardons are on sale now.
- goodluckchuck 2y agoBad decision. > Javice asked an “outside data scientist” to fabricate a list of customers when the bank asked for proof of Frank’s user data, -NBC If they had 3 million fake accounts and didn’t catch the fraud, then they were in on it. It’s a great deal. If the company does well, everyone wins. If it doesn’t, then you already know you can claim fraud. At that point it’s not fraud.
- HFguy 2y agoHow exactly do you think JPM would benefit from fake customers???
- zakki 2y agoWhen fake customers generate real customers.
- goodluckchuck 2y agoI simply mean they probably knew the business didn’t have that 4 Million customers and they were probably content to buy a business that had 300k customers. Would you have turned down an early opportunity to invest in Facebook, Reddit, Airbnb, etc, when they were in a fake it till you make it stage? It’s prudent to recognize that yes the business is cooking the books (after all we’re JPM, you don’t think we do some of that ourselves?) and yes they may also be a worthwhile bet.
- hattmall 2y agoThe way this is different is because those sites were faking it to make their site seem more active to users. Here there's no draw to users it's ONLY for the valuation and purchase. JPM wanted 4 million people unable to fill out a FAFSA but willing to pay to have it done. The exact kind of person who fucks up credit cards and pays $$$ of interest for years.
- blatantly 2y agoA person or group working there benefited from it, which is enough for it to happen. 2008 was that at an endemic scale.
- EdwardDiego 2y agoIs "under 30" in "the Forbes 30 under 30" their age, or the likely upper bound of their prison sentences?
- jorts 2y agoIt’s usually a red flag for someone to not engage with as they have a huge ego and pay to get themselves on that list.
- ahamilton454 2y agoIt’s actually just a Forbes marketing ploy. Me and my company made it on the list and they gave us an interview and the guy that interviewed us asked “what is ChatGPT?” And he was supposed to be head of like AI at Forbes. I actually think they somehow make money from it by hosting conferences and stuff. Either way I always was sus of it
- deleted 2y ago[deleted]
- maest 2y agoI know a couple of people on that list. They are mediocre, at best. So that casts a lot of doubt on Forbes ability/interest in filtering membership. My sense is that you can network/buy your way onto the list.
- jwilber 2y agoYou absolutely do pay to be on that list, definitely an anti-signal.
- trsohmers 2y agoI was put on it in 2015 after an acquaintance of mine that was previously on the list recommended me… I only heard from Forbes a few days before the list came out, they asked me for a photo and asked if I approved the 2 sentence blurb they prepared, and that was it. For years afterwards they would try to get me to come to their events, but I never had any interest, and I assume that was how they made money… but I never paid anything to be on the list or had real interest in being on it, and I don’t think it led to anything other than my technically illiterate parents thinking that it was impressive.
- rvz 2y agoAnother fraud-star is officially born. Joining the ranks of Theranos founder Elizabeth Holmes, Sam Bankman Fried all under the Forbes’ "30 Under 30" list.
- deleted 2y ago[deleted]
- loeg 2y agoLots more: https://www.bu.edu/rbfl/2023/05/17/30-under-30-pipeline-to-prison/ https://www.bu.edu/rbfl/2023/05/17/30-under-30-pipeline-to-p... https://www.theguardian.com/business/2023/apr/06/forbes-30-under-30-tech-finance-prison https://www.theguardian.com/business/2023/apr/06/forbes-30-u...
- IAmGraydon 2y agoIf you're going to steal $175M, don't steal it from the most powerful bank on earth.
- blatantly 2y agoShe was small enough to fail and jail.
- IncreasePosts 2y agoOr, steal it and then get out of there, maybe to some place like Indonesia or Kazakhstan. Don't keep hanging out at the offices of the bank you defrauded
- spoonjim 2y agoHer fate is going to come down to whether she pocketed enough from the transaction to purchase a pardon.
- ipsento606 2y agoI don't understand how one could sell a company with millions of fake users and not expect the purchaser of that company to realize those users are fake? I understand how one could think you'd get away with it if one were lying to investors who might lack the ability to verify the claims But actually selling the company? How would that possibly work?
- deleted 2y ago[deleted]
- mmaunder 2y agoThe article tells you that. They generated a fake user accounts database. The only way to catch that is to manually spot check by contacting users. The buyer clearly didn’t.
- ipsento606 2y agoThe article also says > JPMorgan became interested partly because of the potential it saw in Frank’s supposedly huge list of satisfied clients. The bank believed those future college graduates could become lifelong bank customers Generating a fake user accounts database would only conceivably work if you expected the purchaser to never attempt to contact any of the business's users, which seems a ludicrous expectation.
- irjustin 2y agoThe problem fundamentally is during a sale you don't get access to the actual DB. DD you typically only get a subset of data, so whoever you contact or even physically visit, it all could be fake people answering the phone or even at a fake address impersonating whoever they need to. For $175m of fraud, it's definitely worth to set that up. The core problem here is - the US lacks the ability to realtime verify identity against a centrally government controlled DB. US would never allow this under privacy rules, but that's what it would take to really identify a particular person.
- 2y ago
- bradleyy 2y agoI really don't think that the ankle monitor is going to interfere with Pilates instruction. Florida absolutely has a nonzero amount of "Pilates teachers with ankle monitors".
- rdtsc 2y ago> Florida absolutely has a nonzero amount of "Pilates teachers with ankle monitors". "We gracefully incorporate the ankle monitor into the exercise routine, it's just like an extra weight!"
- ty6853 2y agoNow would be a great time for her to pop out a few kids though, if Holmes is any guidance.
- paxys 2y agoFraud is fraud, but I'm happy JPMorgan got caught up in this mess. Buying a promising startup for its technology or product is one thing, but the bank literally only cared about the personal data of its supposed 4 million high school and college aged users. Good riddance the whole thing imploded and there weren't real teenagers being spammed credit card and car loan offers.
- gopher_space 2y agoI feel like an overlooked aspect of "you can't fool an honest man" is that the honest man probably isn't in your vicinity to begin with.
- soulofmischief 2y agoIf Diogenes couldn't find an honest man after all his time spent searching, I question if honest men are anything more than an old wive's tale.
- throwanem 2y agoNo one who is one ever claims to be one, and vice versa. Easy to miss the existence of anything else, maybe, when the streetlamps insist so loudly on being looked exclusively under.
- freeAgent 2y agoThat sounds a lot like much of Big Tech, too.
- mjcl 2y agoOne funny aspect is that Javice had an employment contract with JPM that stated JPM would pay for legal defense related to her official duties. Her lawyer argued that means JPM has to pay for her civil and criminal defense lawyers, and the court agreed!
- adrr 2y agoIt supposedly costs $1000+ to acquire a bank customer. When I worked at a Neobank, our valuations were based on that number multiplied by the number of customers we had and people believed our valuations. Never had problems raising money.
- anigbrowl 2y agoIf she's smart she salted away a couple million to buy a pardon.
- iamtheworstdev 2y ago$1.8m at a minmum
- JumpCrisscross 2y agoDimon and Musk have feuded in the past. This is honestly in her cards.
- borgster 2y agoHow many other stats we see are faked? She claimed 4.25m users only 300k real. Startup idea: zero knowledge proof audit mechanism for investors to verify usage stats.
- user3939382 2y agoGranted that’s a cool idea, but also how about at least an intern doing basic due diligence for your $175M deal. Especially in this case where they had a red flag that she didn’t want to turn over the list until the deal was done.
- beachy 2y ago> Especially in this case where they had a red flag that she didn’t want to turn over the list until the deal was done I'm not in the game but I think if I was spending this much money I would want some statistically sound samples of the list. Not the whole list, but enough entries to give me a high level of confidence that the list was made up of real people. e.g. hash the name and DOB of everyone on the list, then give me the list of hashes. That way I know the list is not full of duplicates. Then I will pick say 10 at random, request their details, and make sure their hash can be recreated and that they are real people.
- cratermoon 2y agoOpenAI claims 400 million weekly active users. Verify that.
- mirzap 2y agoDo you know what zero knowledge proofs are? OpenAI could create ZKP that would be easy to verify.
- cratermoon 2y agoI do. OpenAI has not done so. Draw your own conclusions.
- cratermoon 2y agoMeanwhile SoftBank is lobbing $40Billion at OpenAI and nobody can really verify if they have the 400 million weekly active users they claim.
- mirzap 2y agoI don't think anyone is investing that kind of money without doing basic DD.
- cratermoon 2y agoWhat makes you think that, especially in light of the story we are commenting on? Not to mention the rest of the 30-under-30 prison pipeline.
- mcny 2y ago> 400 million weekly active users I find it interesting that it doesn't say "paying" users. Also, I remember there was at least one time when the New York Times allegedly gave away newspapers to boost circulation numbers. If chat gpt does not require a log in and someone uses two different computers logged out on chat gpt at least once a month each, you could argue he is two people as far as the company is concerned?
- whack 2y ago> Frank’s chief software engineer, Patrick Vovor, testified that Javice had asked him to generate synthetic data to support her claim that the company had more than 4 million users. When Vovor asked if that was legal, prosecutors said, Javice and Amar assured him that it was — and told him they didn’t want to end up in orange prison jumpsuits. Vovor testified that he refused to help. “I told them I would not do anything illegal,” Vovor told jurors. > Seeking to dent Vovor’s credibility, defense lawyers suggested he was resentful that Javice didn’t want to date him. That is one hell of a defense
- paxys 2y agoThis should be used as an example in engineering ethics classes for how important it is to say "no" to your employer when you are asked to do something that doesn't pass the smell test, no matter how trivial it may seem. This simple act saved the guy his career and (potentially) freedom.
- ibejoeb 2y ago> engineering ethics classes Sidebar: do these exist these days? I mean in software, specifically.
- laverya 2y agoI had one at University of Michigan, but that was almost a decade ago now.
- nightpool 2y agoYes, all accredited institutions are required to have one as part of their Computer Science curriculum.
- anarticle 2y agoIf you didn't have one, this is a great book: https://www.amazon.com/Human-Error-James-Reason/dp/0521314194/ https://www.amazon.com/Human-Error-James-Reason/dp/052131419... Was used at Drexel in the 00s.
- kittikitti 2y agoGuess "fake it till you make it" doesn't scale well.
- MrMcCall 2y agoScaled Ms. Holmes up to around 11 years, IIRC.
- kristofferc 2y agoScales perfectly well with a 1.8 million donation to the correct place, though. Her mistake was not the fraud, it was the forgotten donation.
- RC_ITR 2y agoWhat’s crazy to me about all of this is that the College Board will happily sell you the contact info for the 2mn students who take the SAT each year. We’d probably not know about this if Javice just spent 10 minutes thinking, created a small scholarship, bought student contact info to “market” the scholarship, and then used that real data to commit fraud. Maybe some recipients notice and report something to JPMorgan, but how many 18 year olds are actively reporting spam?
- auc 2y agoSo deserved.
- nimish 2y agoSo what did the 'due diligence' people actually do on this transaction?
- ibejoeb 2y agoOne wonders. I do b2b stuff, so I verify that clients and contracts actually exist. What happens when you're doing DD for this kind of deal where they're effectively buying a client list comprised entirely of individuals? Call a sample?
- DeathArrow 2y ago>Prosecutors said Javice ended up paying a college friend $18,000 to create millions of fake names with pedigree information. The results were sent to JPMorgan’s third-party data provider, but testimony showed that firm never checked to ensure the people were real. If someone tries to sell me something and I ask for proof, I would be very stupid not to check that evidence. Why do big banks hire stupid people and let them lead large deals?
- DeathArrow 2y agoI somehow have the suspicion that many successful startups began as frauds but their founders either weren't caught or the investors weren't interested to defer them to justice.
- deleted 2y ago[deleted]
- financetechbro 2y agoHi Charlie, IANAL, but if you’d like to get out of this mess I suggest you donate $1-2M to Ronald Krump. Enjoy the freedom!