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I 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 und
by ipsento606 2y ago
I 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?
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- 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.
- stevage 2y ago> the US would never allow ... Any sentence of this form needs to be treated with the utmost skepticism these days.
- noisy_boy 2y agoI find it hard to believe that there are no third party providers that can do such spot checks by selecting a random sample from the data under an NDA.
- irjustin 2y agoNot one where you can guarantee the actual person. Having SS number doesn't get you contact details and thusly at the mercy of the one who wants to fraud you
- phonon 2y agoThey did have a third party "verify" the data, Acxiom. https://fortune.com/2023/04/11/synthetic-data-millennial-founder-charlie-javice-frank-jpmorgan-fake-customers-fraud-trial/ https://fortune.com/2023/04/11/synthetic-data-millennial-fou...
- noisy_boy 2y agoThanks for the link: > At JPMorgan’s insistence, Javice said, she completed the task “over a couple of days and nights.” The professor uploaded Frank’s “customer list”—which now contained the synthetic data—to Acxiom on the morning of Aug. 5, the bank said. Acxiom analyzed the data and provided its report to JPMorgan later that evening. Acxiom destroyed the underlying data as its contract required, Javice said. Three days later, on Aug. 8, JPMorgan agreed to buy Frank for $175 million. Acxiom declined comment. Analyzed the data and gave report the same evening? What the hell? How on earth Acxiom is not on the hook? Is incompetence a defence? And how can they avoid going bankrupt if they choose that defence because nobody will give any work to a company that admits it? I'm now more intrigued about the Acxiom side of story.
- lemax 2y ago
- yieldcrv 2y agoThe thing that stands out to me about indicted and convicted fraud cases is how they always spell out “all you had to do was” Like with onecoin, all they had to do was have a blockchain and it would have been the same standard of non-indictable fraud as everyone else Here all she had to do was harvest from data brokers
- ameliaquining 2y agoShe did harvest from data brokers. The AP article doesn't really get into this, but the SEC complaint (https://www.sec.gov/files/litigation/complaints/2023/comp-pr2023-74.pdf https://www.sec.gov/files/litigation/complaints/2023/comp-pr...) explains: "Knowing that JPMC would have access to Frank’s real and much more limited student data after the close of the acquisition, Javice and another high-ranking Frank executive (the “Frank Executive”) began an effort to create a list of real names that they could pass off as Frank’s customers. To that end, the Frank Executive arranged for Frank to pay $105,000 to a third party data compiler for its in-college student data. Javice arranged for Frank to pay $75,000 to a different data compiler to augment the list the Frank Executive bought with email and phone number data."
- Centigonal 2y agoShe actually tried! In the original complaint, JPMC's lawyers wrote that Javice & Co generated their "user database" by securing a leads list from one data broker, and then turning around and asking a second data broker to enrich it with users' personal information to make it look like a customer list. She hired a college professor freelance to add in synthetic data wherever the data from the brokers was lacking. If the data brokers she worked with had high quality leads, maybe it would've taken longer for them to get caught. :p
- bambax 2y agoYes, absolutely. It is ludicrous. But I think the real reason is those people attempting fraud are fundamentally psychopaths: they can't think correctly about a future where they're being caught. They fix the present, one lie at a time, and get an immediate, narcissistic personal reward every time they fool someone. They also think rules don't apply to them, and most of the time they're right, as they most often get away with it.
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- afavour 2y agoThe truth is, these are not very bright guys, and things got out of hand.
- freeAgent 2y agoPerhaps she thought that she would be able to wiggle out of it or reach a private settlement that saved JPM some embarrassment or something. Still, that was obviously a very stupid decision.
- caminante 2y agoCan't tell you how many times this happens, and the buyer doesn't even go public. Seller probably had leverage to negotiate limited reps and warranties with no earnout and more cash upfront along with saying no to pre-close diligence.
- jryb 2y agoI’d speculate they convinced themselves that their startup was fundamentally great and they just needed more time for it to attain its full potential. The fake users were just a way to show JPM the company they’d eventually have, so nobody was really going to lose (in their minds).
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