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Founder sentenced to seven years in prison for fraudulent sale to JPMorgan

262 points by mandeepj 1y ago

exasperaited 1y ago
Sentenced to a really, really expensive purchase of Trump shitcoin. I'm sure he can find something to like about someone who made a fool of JPMorgan.
frogperson 1y ago
He broke an unwritten, cardinal rule, which is to never steal from the rich.
- showmexyz 1y ago
  Still what she did was fraud. From the article - "Still, the judge criticized the bank, saying “they have a lot to blame themselves” for after failing to do adequate due diligence. He quickly added, though, that he was “punishing her conduct and not JPMorgan’s stupidity.” "
  - mothballed 1y ago
    Not to justify it, but why isn't the founder of UPS (edit: Fedex) in prison? I don't think it was legal to go and literally spend their money at the casino. If you turn a profit no one cares (unless you're Shkreli, don't think his investors lost money, but he pissed off some politicians because he said the quiet parts out loud about how the pharma industry works), if you lose it's fraud. When all the winners are doing it, hard to compete otherwise... not that it makes it right.
    - privatelypublic 1y ago
      What are you thinking the crime would be? He bet his company on a literal toss of the dice instead of the routine figurative ones. Outside of Bribery and ?SarBox? (Whichever regulation handles kickbacks, etc), I can't think of anything.
      - mothballed 1y ago
        If you spend investor money at a literal casino while advertising a non-casino related business, and pay the investors back, probably people will view you as not committing a crime. If you get investor money or get a loan on the basis of funding logistics investments, bet it on roulette red, and go bankrupt, I would expect you'd be looking at hard jail time for fraud. So I'm thinking the crime would be nothing, because he was a winner, and the optics totally changed, and fraud relies on very subjective opinions of a jury.
        bryanlarsen 1y ago
        There are lots of examples of people going to jail despite investors getting their money back, like SBF and Shkreli. Even Madoff investors got 94% of their investments back.
        mothballed 1y ago
        Shkreli is the only one of those 3 that fully paid back his investors, and it took him pissing off virtually every politician and a bunch of wealthy insurance executives/administrators to get enough resources mobilized to get a conviction (and being one of the most uncharismatic people on earth, which didn't help him at trial). I think you are definitely in a much worse place for a fraud conviction if you lose money.
        bryanlarsen 1y ago
        News stories said SBF investors were going to get 118% of their money back. Did that not happen? https://techcrunch.com/2024/05/08/ftx-crypto-fraud-victims-to-get-their-money-back-plus-interest/ https://techcrunch.com/2024/05/08/ftx-crypto-fraud-victims-t...
        mothballed 1y ago
        No because the assets ('money') deposited to SBF were crypto, and you just gamified it by doing a currency exchange to USD while disingenuously failing to note that in that time the USD value of the crypto went up. If you want an accurate reflection, note how much of the crypto deposited went in, and then how much came back out after SBF lost it. This would be like me depositing USD, someone stealing some of it, then you bragging the value went up because I have a larger quantity as measured in Venezuelan Bolivars. What actually happened is their % they recouped was less than 100 until you artificially change to an entirely different currency.
    - potato3732842 1y ago
      > (unless you're Shkreli, don't think his investors lost money, but he pissed off some politicians because he said the quiet parts out loud about how the pharma industry works) What's the TL;DR? His wikipedia page doesn't make it obvious.
      - mothballed 1y ago
        Shkreli's schtick was to buy out or control pharma companies that had a monopoly and jack the everliving fuck out of the prices. He had some programs for uninsured people, but he would milk the insurance companies absolutely dry, which gave him some wild profits. This made a bunch of powerful people absolutely enraged, as he was basically publicly bragging about jacking the ever living fuck out of the prices. Pharma companies do this but Shkreli would publicly say it and tell the truth that basically the other companies were doing it while pretending to be good people, and he was only being honest about it. Poor people were pissed because they were told they couldn't get their drugs (I'm unaware if the program that allowed uninsured people to get them for cheap was real or not), and the rich insurance people pissed because he was basically he was bilking them. So they went back and discovered one or some of his other early enterprises weren't profitable, but that he had used money he made off his later pharma enterprises to pay back his earlier investors. In trial, his investors testified they were happy with the situation, lost no money, and would invest with him again. But they still convicted him for fraud, even despite the 'victims' themselves did not believe they were defrauded. It didn't help that Shkreli is probably one of the most profoundly unlikeable people you can possible listen to, unless you're not bothered to hear a hyper-capitalist be honest about how they do business.
        potato3732842 1y ago
        Sounds like basically the big boy version of how all the other psychiatrists who run plausibly deniable pill mills will screech about the one running a flagrant pill mill until they lose their license.
        notmyjob 1y ago
        Victims not wanting prosecution doesn’t absolve the perpetrator as wife beaters learn all the time. I also think Skhreli’s biggest mistake was threatening Hillary Clinton.
    - 1123581321 1y ago
      There is truth to this. She was exposed because JP Morgan ran a marketing campaign that converted extremely poorly. Better purchased data might've prevented significant forensics. The poor due diligence had already been signed off. While she committed fraud, I feel sorry for her because of her naivety. It must've been a sick moment when they asked to examine the data during due diligence. If she'd known that would be used for marketing integration so quickly, maybe she would have backed out of the deal.
      - miltonlost 1y ago
        From the complaint: > In particular, CC-1 and JAVICE asked Engineer-1 to supplement a list of Frank’s website visitors with additional data fields containing synthetic data. > Engineer-1 was uncomfortable with the request and stated, in sum and substance, “I don’t want to do anything illegal.” JAVICE and CC-1 claimed to Engineer-1 that it was legal. JAVICE stated to Engineer-1, in sum and substance, “We don’t want to end up in orange jumpsuits.” Engineer-1 declined the request from JAVICE and CC-1. She's not naive. She was told this was illegal and then did it still. She knew this was fraud.
        1123581321 1y ago
        Yes, read the same. Naive in thinking she could get past that and they wouldn’t do anything particularly revealing with the data. A smarter fraudster would’ve backed out earlier with less damage.
      - IncreasePosts 1y ago
        She's so naive, she just hung around until someone found out the fraud. It made me wonder what she was thinking when her $30M share landed in her bank account. "Whee, I got away with it", "it's their problem now"? I don't think I would commit fraud, but if I did it for that amount, I would be on a flight to Malaysia or some other place with no extradition with the US!
    - curiousObject 1y ago
      why isn't the founder of UPS in prison? I don't think it was legal to go and literally spend their money at the casino That was FedEx’s founder, Fred Smith. It wasn’t UPS He only had $5,000 of funds remaining, which he gambled playing blackjack, so the potential loss to investors was small. He’d already lost almost all their investments through operating FeDex
      - FireBeyond 1y ago
        The investors? At that point he had been stiffing his pilots on wages for weeks or months, and with many also paying fuel bills on their personal credit cards/checks, since many fuelers had canceled FedEx's accounts. Yeah, $5K isn't a whole lot, but if I'm a pilot struggling to put food on my family's table, and the CEO takes company money to Vegas, I'm not thinking "Oh, but the investors" or "Sure, it's not that much money anyway". I don't see why people (not saying you, in particular) see this as some heroic founder "risking it all". He wasn't. He was risking the company's "all", after asking the employees to suck up his mismanagement.
        curiousObject 1y ago
        some heroic founder "risking it all". He wasn't. He was risking the company's "all", after asking the employees to suck up his mismanagement. I agree. He was asking employees not to cash their paychecks sometimes. $5000 is inconsequential compared to that forced investment from employees and business partners
        red_rech 1y ago
        [dead]
    - IncreasePosts 1y ago
      There's no knowledge as to whether he used company money, or personal cash/line of credit. In fact, there's no knowledge of the story is even true, apart from what one dead man wrote!
- troyvit 1y ago
  I was about to go on a rant about, "Why is it ethical to put people in jail for doing things that only affect money? Was anybody at JPMorgan hurt as bad as jail will hurt this person?" But you already answered the question.
  - fourseventy 1y ago
    If I steal all your money I shouldn't go to jail?
    - troyvit 1y ago
      I personally believe money crimes should have money punishments and corporal crimes could have corporal punishments. If you steal from me and go to jail how did I benefit? If you steal from me and I get a bunch of $ for pain and suffering and you get your pay docked for n years that seems good.
  - deleted 1y ago
    [deleted]
- taytus 1y ago
  same as Theranos
- arbuge 1y ago
  She
- ChrisMarshallNY 1y ago
  > He broke an unwritten, cardinal rule, which is to never steal from the rich. "She". The name is "Charlie," but it's a young woman. And, like another young woman, she stole from the rich, and got jailed. She'll probably get a federal minimum-security prison (no fences and a golf course). They aren't quite "Camp Cupcake," but they are a far cry from places like Leavenworth (I've known folks that have done time in both).
- Aurornis 1y ago
  Believe it or not, smaller fraudsters get prosecuted all the time, too. One of the news reporters I followed on Twitter in my area liked to follow all of the small cases of real estate and business fraud in my area. There were a lot of prosecutions for people who were stealing <$10K at a time through affinity fraud and fake business investments. You just don't hear about them as much because someone going to jail for stealing $60K from a couple families from their church in a fake real estate scheme isn't as exciting as a massive fraud against JP Morgan.
  - HankStallone 1y ago
    A few years ago the manager of our local Menards got convicted of stealing over a half-million dollars over 5 years. She only got 180 days, too, and was allowed to leave the jail for work. Depending on how high on the hog she lived for those five years, she might figure it was worth it. I knew one local HVAC company where the office manager skimmed off six figures over something like 20 years before she got caught. Just slow and steady, never taking enough to be obvious, I guess. It happens more than people would think.
    - wil421 1y ago
      I knew a guy whose parents basically invented thrift stores. He’s accountant did the same thing while he was battling drug addiction. Not sure if she ever got prosecuted I think the owner wanted to move on. Then he died of a heart attack.
- rdtsc 1y ago
  > He broke an unwritten, cardinal rule, which is to never steal from the rich. Right from the article > Addressing the court before she was sentenced, Javice, "she was" ... The title even: > Charlie Javice sentenced to seven years in prison for fraudulent sale of her startup "her startup" ... Kind of curious, how did you determine their gender? Guessing, saw the title on HN only without clicking on the link assumed it must be a "him"?
rchaud 1y ago
> Javice appeared regularly on cable news programs to boost Frank’s profile, also once appearing on Forbes’ “30 Under 30” list. ...alongside other scrupulous business luminaries like Sam Bankman Fried, Shkreli and Holmes.
- jordanb 1y ago
  The Management Consulting to Prison Pipeline.
renewiltord 1y ago
Lol the biggest loser here is the ad tech company that was used to validate the entirely generated emails and somehow gave JPMC the belief that the emails matched in the DB. Get fucking rekt.
generalpf 1y ago
Another Forbes 30 under 30!
- duxup 1y ago
  It's funny how a lot of those media blurb lists are just "this person says they're doing things at a functional business".
TuringNYC 1y ago
>> A prosecutor, Micah Fergenson, though, said JPMorgan “didn’t get a functioning business” in exchange for its investment. “They acquired a crime scene.” I do not understand how an acquisition this big got thru due diligence without noticing all the fake users. Anyone in corporate M&A know if it is normal to spend this much money without inspecting the goods? Seems like the most basic of OLAP queries and two days of effort would reveal very suspicious userbase.
- upupupandaway 1y ago
  One previous company I was CTO of got acquired by Amazon and they spent 60 days going through everything, including every line of code. I doubt a fraud of this caliber would have gone unnoticed with that kind of due diligence.
  - vjvjvjvjghv 1y ago
    Sometimes I wonder if there is a lot of scrutiny in small things but when things get large and complex they basically give up and wave it through. I see a similar thing at my work in medical devices. In theory we have to validate all libraries we are using. So if you want to share some code you have to create a ton of documents. But when we use something like nodejs with hundreds of dependencies the whole process basically gets handwaved away because validating everything would be too much work.
    - brandall10 1y ago
      It's not that complex, there was nothing technical here. You could say this was 'social engineering' at some level. She pushed back against access to the customer list claiming privacy laws as a shield. JPMorgan was overly eager and didn't want to blow up the deal by challenging her.
    - chatmasta 1y ago
      I wouldn’t be surprised if they waved it through because “who would be dumb enough to provide us a fraudulent list of customers?” She was always going to be discovered once they tried to market to the list. So I could see them speedrunning due diligence under the assumption that, if it’s totally fraudulent, it will be obvious eventually and then we’ll sue her. The deal is not large enough to affect our bottom line, and the obvious risk of defrauding us makes it unlikely she’s defrauding us.
vjvjvjvjghv 1y ago
[flagged]
- twixfel 1y ago
  Yeah I'm surprised she didn't donate to the Trump campaign, seems like a huge misstep on her part.
- pessimizer 1y ago
  No different than ozy.com's story, and Carlos Watson got the pardon. It helped that he was basically Powell-Jobs's pet (one of the owners of the Democratic Party), then kissed Trump's ass on top. His entire deal was making connections with rich white people who wanted a black friend to tell them they were not only good people, but the best people. Excellent work if you can get it. I don't think you can start this charm offensive after the crime, though. The only person I've ever seen manage that is Rob Blagojevich. As has been said, the value of standing under a huge tree is more the shade, not the fruit. Your rich friends may never do anything for you, they might only value your friendship because you're one of the few who have never asked them for anything. But, consistent with that, if somebody attacks you they'll defend you as hard as they defend their other possessions. That kind of armor enables you to pluck fruit from other trees.
- wnevets 1y ago
  There is still time to buy some Trump crypto
randycupertino 1y ago
My favorite thing about this case is how she bragged to her lead engineer she wouldn't go to prison, "“Don’t worry — I don’t want to end up in an orange jumpsuit" when she was trying to convince the engineer to fabricate their user data. From the complaint: > In particular, CC-1 and JAVICE asked Engineer-1 to supplement a list of Frank’s website visitors with additional data fields containing synthetic data. > Engineer-1 was uncomfortable with the request and stated, in sum and substance, “I don’t want to do anything illegal.” JAVICE and CC-1 claimed to Engineer-1 that it was legal. JAVICE stated to Engineer-1, in sum and substance, “We don’t want to end up in orange jumpsuits.” Engineer-1 declined the request from JAVICE and CC-1. > shortly after Engineer-1 had declined the request to create a synthetic data set—CHARLIE JAVICE, the defendant, contacted Scientist-1 and asked him to create the synthetic data set. In JAVICE’s communications with Scientist-1, she falsely represented that the data she provided to Scientist-1 was a random sample of a much larger database of Frank users. > Also on or about August 3, 2021, JAVICE forwarded to Scientist-1 the Access Link Email sent to her by Engineer-1. JAVICE wrote, “here is the link. will share credentials offline.” Based on Scientist-1’s communications with JAVICE, Scientist-1 understood that the data available via the Access Link Email—a data set of approximately 142,000 people—was a random sample of a larger database which contained data for approximately 4 million people. source: https://www.justice.gov/usao-sdny/press-release/file/1577861/dl https://www.justice.gov/usao-sdny/press-release/file/1577861...
- ajross 1y ago
  > she bragged to her lead engineer she wouldn't go to prison So... obviously she was wrong. But the line between "just cutting a few corners" and prosecutable criminality isn't nearly as bright as we in the peanut gallery like to think. Lots of very successful startup launches (Uber and AirBnB are famous examples) were kinda/sorta/prettymuch illegal by the plain language of the laws they were (not) operating under. And they got stinking rich! PG himself has an example in one of the very early essays about how Viaweb kinda just skipped most of the early bureaucracy and accounting they were supposed to have been doing, figuring it would all just work out. And it did. Kids see those examples and figure that a little cheating here or there probably isn't going to send them to jail. And it usually doesn't. Except when it does. And the distinction, for a lot of people in this community and right here on this forum, is very much a "There but for the grace of God go I" phenomenon. Startup culture tells you to cheat, basically. Knowing how not to cheat isn't in the instruction manual.
firefoxd 1y ago
At an investor event, a desperate journalist was running around the room asking people their age. He ended up at our table, with a drink in hand, and a defeated look on his face. He had given up. We talked a bit, and he asked me, "are you under 30?" I answered "No. But this guy is." I pointed at the 28 year old cofounder of the start up I was part off. Before the evening was over, my colleague made it to the list of forbes 30 under 30.
- robertlagrant 1y ago
  Do you know the journalist's name? I'd love to be part of Forbes' 10 billion under 10 billion.
  - teachrdan 1y ago
    The Onion had a listicle entitled "80 Under 80 -- and five 79-year-olds to watch out for." Once again they nailed the inherent vacuousness of modern news.
- Aurornis 1y ago
  The people I know who made the 30 under 30 list approached it like a massive campaign they had to win. It was a full-court press to get in front of the right people and their startup's PR releases were all timed to impress for the 30 under 30 during that period. Maybe times changed since it became more of a running joke. At one point it was a selling point for fundraising that people would compete hard over.
  - code4tee 1y ago
    Every person I personally know on this list made it their life mission to be on the list. It was lost on them that the whole thing has become a running joke that everyone else thinks is just full of grifters.
    - selimthegrim 1y ago
      The one person I know who made that list drunkenly confessed to doctoring his high school transcripts to get into college.
whimsicalism 1y ago
> In seeking a 12-year prison sentence for Javice, prosecutors cited a 2022 text Javice sent to a colleague in which she called it “ridiculous” that Holmes got over 11 years in prison. This seems utterly irrelevant to the sentencing, but what do I know.
- tptacek 1y ago
  Goes to remorse.
- Aurornis 1y ago
  Sentencing can be impacted by several factors like this. If the criminal shows a blatant disregard for the law and views lawbreaking as a risk-reward tradeoff to get what they want, they're more likely to commit crimes in the future. If there had been more evidence that she reluctantly went with the scheme under desperation or pressure and held immense regret and remorse, in theory that would suggest a shorter sentence. If I recall correctly, Elizabeth Holmes' lawyers tried to push the angle that she was pressured into committing the frauds as a way to lower the temperature of the case.
wkoszek 1y ago
It's interesting how nobody talks about due-diligence being completely broken. We raised $$$ from many VCs and the DD for some of them was crazy: line item by line item with calls to customers etc. Tech folks were on phone with me and had to explain them stuff step by step, revealing a lot of confidential recipes. Also did this for bigger customers. And the $175M deal.. isn't there an earnout? Like $10M cash now, 1/4*$175 wired on 1yr cliff, and then the rest over 4 years if some milestones are hit? The whole thing looks weird.
- Aurornis 1y ago
  > It's interesting how nobody talks about due-diligence being completely broken. The majority of the talk around this case has been about the due diligence failures. The judge even called it out. Consumer businesses are harder to vet. It's not like a B2B with a dozen top customers where you can call them all and confirm that sales are happening. Non-response and customer churn is expected to be a high and changing number. From what I read she also invoked various privacy law excuses to give them the run-around while they were pressured to close the deal. But JPMorgan's failures don't excuse the criminal actions. If someone enters your house and steals your computer, it doesn't matter if you negligently left the door unlocked. A crime is a crime.
  - NickC25 1y ago
    >From what I read she also invoked various privacy law excuses to give them the run-around while they were pressured to close the deal. And that should have been a massive red flag for JPMC. They should have nope'd out of that deal on the spot. I run a hybrid B2B and B2C consumer packaged good company. I have a few small investors. They know who my top clients are, because they ask in good faith, and I answer in good faith.
    - Aurornis 1y ago
      > I run a hybrid B2B and B2C consumer packaged good company. I have a few small investors. They know who my top clients are, because they ask in good faith, and I answer in good faith. Right, because it's easy to share your customer list when you have a small number of customers and they are repeat customers. Her company helped with student loans. Her customers were mostly one-time customers. The customer count was supposed to be indicative of how many new college students they could expect to sign up each year.
code4tee 1y ago
I see the string of “30 Under 30” being a statistically valid predictor of future likelihood to go to prison continues. These lists feed on the narcissistic tendencies of grifters who are desperate to get on the list and then tell you about it on LinkedIn. These lists have such a bad reputation these days that legit top folks are asking their PR people to keep the off!
- mi_lk 1y ago
  fwiw whoever makes 30 under 30 list also acknowledges it: https://www.forbes.com/sites/forbesunder30team/2023/11/28/hall-of-shame-the-10-most-dubious-people-ever-to-make-our-30-under-30-list/ https://www.forbes.com/sites/forbesunder30team/2023/11/28/ha...
- disqard 1y ago
  Reading Kornetzke's summing up of America, this fragment reminded me of SV and VC culture in particular: "greed exalted as ambition" You can google "It is America’s shadow made flesh" to find the entire passage.
code4tee 1y ago
Another “30 under 30” grifter goes to jail. Separately, I hope a few folks at JPMC got fired over this. Even the most basic of due diligence should have caught this.
- arunc 1y ago
  Less likely to happen. They had their pay days!
drcongo 1y ago
Has anyoine from JPMC gone to prison for 2008 yet?
- deleted 1y ago
  [deleted]
- SpicyLemonZest 1y ago
  A number of people from JPMC have gone to prison for financial crimes in general, including some (e.g. https://www.justice.gov/archives/opa/pr/former-jp-morgan-traders-convicted-fraud-attempted-price-manipulation-and-spoofing-multi-year https://www.justice.gov/archives/opa/pr/former-jp-morgan-tra...) which occurred during 2008. Nobody from JPMC has gone to prison for causing the 2008 financial crisis because there's no evidence that someone from JPMC caused the 2008 financial crisis.
geor9e 1y ago
I wonder what really happened here: "The judge said Javice had assembled a “very powerful list” of her charitable acts, which included organizing soup kitchens for the homeless when she was 7 years old and designing career programs for formerly incarcerated women." At least for all my classmates doing the college application process, claims like that were almost always wild exaggerations of what we really did.
- masfuerte 1y ago
  It seems like the effect of these college requirements is to teach ambitious young Americans that the way to get ahead is to cheat.
  - wat10000 1y ago
    It's a valuable lesson.
    - qingcharles 1y ago
      They need to spend more time on the "not getting caught" chapter, I guess.
  - ryandrake 1y ago
    Unfortunately, it's an arms race of cheating. Everyone else was the president of 5 school clubs, volunteered at a soup kitchen and animal shelter for 2 years, tutored disadvantaged kids for 4 hours a day, was a varsity athlete in 3 sports, played the trombone in band, and won 10 academic awards... so everyone has to say that in order to at least seem like an average candidate to college admissions.
    - ChrisMarshallNY 1y ago
      I dropped out and got my GED. I don't think there's one thing in my K-12 transcripts that would look good. I was not exactly a valedictorian-level student. Done a bunch of stuff, since then, but it's not right to throw onto LinkedIn. It's the kind of stuff we don't take credit for.
SapporoChris 1y ago
Is it correct that Charlie Javice is keeping the majority of the profits she made from the sale of Frank? If so, it's quite possible she considers the profit well worth the penalty.
- tptacek 1y ago
  No. She's required to make restitution far in excess of the total proceeds of the sale, including as a minor component a sum that captures her own personal proceeds.
  - SapporoChris 1y ago
    Ah, thank you. I found the details here. https://www.justice.gov/usao-sdny/pr/startup-ceo-charlie-javice-sentenced-85-months-prison-175-million-fraud https://www.justice.gov/usao-sdny/pr/startup-ceo-charlie-jav... “Javice perpetrated a $175 million fraud—repeatedly lying about the success of her startup company and even hiring a data scientist to create fake data to back up her lies. For that, Javice has been sentenced to 85 months’ imprisonment and ordered to pay over $300,000,000,”
    - qingcharles 1y ago
      I don't know how they run that in federal prisons, but in some states they'll just put that balance on your commissary account, so you'd go to buy some noodles and you'd be -$300m before you start.
      - harambae 1y ago
        I don't think they do that in FCI's (I have a friend in right now). They do, however, have a cap on the commissary of like $400 a month or so. So even if you're a billionaire it's not super helpful (although you can probably cut deals to add a little bit to other people's accounts, etc..)
  - sally_glance 1y ago
    Maybe JP did actually smell something during DD but decided to go ahead because of FOMO and confidence that they could just sue later if their concerns turned out to be true...
onlyrealcuzzo 1y ago
It's interesting to me that fraud appears to be a crime again, with Theranos and now this, when it was going on for so long and so obviously, and no one seemed to care when people were lying and frauding as long as it went on long enough for them to make a profit.
- cheema33 1y ago
  This lady could say that she was a victim of Biden justice dept. Say good things about Trump and follow it up with a large donation to Trump. That ought to be enough to get a pardon. This is exactly what the convicted fraudster Trevor Milton, founder of Nikola Motors did, to get a pardon. When signing the pardon, Trump said that he doesn't know anything about Trevor but heard that he likes Trump.
  - deleted 1y ago
    [deleted]
joshmn 1y ago
Former federal inmate here who was recently released from prison a month ago today (I did 18 months): The big deal here was the loss amount, which can be construed any number of ways whether we like it or not. This will jack up the points and tilt the scale for the sentencing guidelines, and believe me they are archaic. After all is said and done, Charlie Javice will be hanging out at a prison camp—probably down there with Holmes and Maxwell, because it's cushy—and do no more than 4 years on the 7 assuming she completes all her programming requirements.
- 64d032fe 1y ago
  Reading about you a bit. Would you say I shouldn't go and try to create the replacement for Streameast?
- electroglyph 1y ago
  did u transition out in corecivic?
  - joshmn 1y ago
    I got picked up by my partner, thankfully. I was a self-surrender too. I did hear that they yanked out all the valuable assets from Cimarron (OKC's out-of-custody transfer facility) and now all the doors are manually keyed, amongst other things.
- next_xibalba 1y ago
  [flagged]
  - zoklet-enjoyer 1y ago
    His views on sentencing have nothing to do with if he believes he did anything wrong.
  - paulpauper 1y ago
    who cares if he take accountability or not. he served his time.
greenavocado 1y ago
Does anybody have the number for how much she will likely make off with ultimately ten years from now once everything settles?
- verteu 1y ago
  I don't think she gets to keep the money - the prosecution claims she'll be "forced to pay over $300,000,000" in restitution.
  - greenavocado 1y ago
    Ignoring this posturing from the prosecution, what is the precedent?
  - yokumfloster 1y ago
    And not only does she have to pay $300M – she didn’t even get the $175M that JPM paid. A lot of that — the majority most likely — went to her investors.
ashu1461 1y ago
What decides if a founder will get convicted or walk free like Adam Neumann did / Builder.ai guys did ?
- tamimio 1y ago
  Connections.
  - AirMax98 1y ago
    And make sure you steal from the right people.
    - arunc 1y ago
      Vulnerable
- thruway516 1y ago
  Steal from the public not powerful well-connected financial institutions
tamimio 1y ago
Banks scamming people is fine and legal, but don’t you dare to scam banks, know your limits, peasant!!
danpalmer 1y ago
This feels like a case of both parties getting caught up in their own bullshit. It seems unlikely that the founder was intentionally fabricating data in order to commit fraud. Far more likely is that the founder was caught up in Silicon Valley startup culture, told they were disrupting industries and changing the world, and didn't put enough into actually doing the work, and ended up thinking their company was much more important than it was. Throw in some of the toxicity of #girlboss culture (this is a criticism of the negative aspects, we do need more female founders), and you get a Dunning-Kruger situation. I can see how someone would then keep digging rather than pull out if things started to turn. On the other side, JPMorgan obviously didn't do any real due diligence. They were too caught up in the industry hype, and want to continue their cosplay as a tech disruptor. Finding this would have taken almost no effort, there wasn't much attempt to hide it. Promoting what the company wants to be true rather than what is actually true is a clear sign of a rotten culture – people won't speak up even when there is literally no good outcome that can come from staying silent. JPMorgan got exactly what they deserved with this deal. I feel sorry for the founder getting caught up in the cultural currents that led to this, and while they need some accountability, a prison sentence probably isn't right.
- dboreham 1y ago
  Yes it was dumb and dumber, but once you get to writing programs to fabricate user data for DD purposes, you're in the Bernie Madoff camp. He also defrauded dumb people, and various smart people concluded he had to be a criminal. Still a criminal.
KnuthIsGod 1y ago
"In 2022, JPMorgan filed a lawsuit for fraud, claiming that the data reported by Frank was largely a fabrication and alleged that Javice paid a data science professor $18,000 for a list of more than four million fake student names to convince JPMorgan to purchase Frank."
- franktankbank 1y ago
  How do you pay that much money to get synthetic data? What a racket. I wonder if the professor feels shame for their complicity here.
  - postexitus 1y ago
    Could have waited for a few months and got an LLM do it for her.
  - iamleppert 1y ago
    There is a specific distribution of names of people that is very hard to fake. Think all the different first names, last names, their spellings and common names. Generating that many realistic fake names that still match the distribution of real names is hard.
    - franktankbank 1y ago
      So if a distribution exists and the data scientist is aware of it and knows hed need to match it within some deviation then that is pretty trivial to do in not too much time of coding and not too much runtime. If guy doesn't have that and doesn't know hes party to a fraud then its just as easy, random match first names and last names from a limited list. There's no training scenario imaginable that would be taking into account some particular name details. Guy was probably paid near 10k per hour, which I don't know, might trip me up a bit.
      - iamleppert 1y ago
        When I said it's "hard" I mean for the average non-technical person, or someone who doesn't have access to a real-world dataset with millions of names for comparison. You can easily find such datasets on the dark web, FYI.
camillomiller 1y ago
The startup world is made up of grifters of all sorts that make up BS all the time. And yet, in the end it’s always the women that get spectacularly sentenced? The only exception I can think of is SBF, but that was a quite different case.
tpoacher 1y ago
> Javice was among a number of young tech executives who vaulted to fame with supposedly disruptive or transformative companies, only to see them collapse amid questions about whether they had engaged in puffery [...] I'm assuming the key punisher here is the "collapse" rather than the "puffery". I don't think I've seen an "honest", "unpuffed" company since the 90s when companies were still wishing their customers merry christmas over the radio.
black_puppydog 1y ago
> “haunted that my failure has transformed something meaningful into something infamous.” Not a US resident, so this may be off-base, but IIUC this a student loan platform, or rather actually just a better interface to it?
- le-mark 1y ago
  It was a service that aided in filling out a well known federal form (for student loans). Similar to how there are multiple companies that sell a service to fill out (prepare) federal forms for income tax. Why are these forms so complex? The eternal question. The tax forms companies actually lobby against simplifying.
seivan 1y ago
[dead]

262 points by mandeepj 1y ago

Sentenced to a really, really expensive purchase of Trump shitcoin. I'm sure he can find something to like about someone who made a fool of JPMorgan.

frogperson 1y ago

He broke an unwritten, cardinal rule, which is to never steal from the rich.

showmexyz 1y ago
Still what she did was fraud. From the article - "Still, the judge criticized the bank, saying “they have a lot to blame themselves” for after failing to do adequate due diligence. He quickly added, though, that he was “punishing her conduct and not JPMorgan’s stupidity.” "
- mothballed 1y ago
  Not to justify it, but why isn't the founder of UPS (edit: Fedex) in prison? I don't think it was legal to go and literally spend their money at the casino. If you turn a profit no one cares (unless you're Shkreli, don't think his investors lost money, but he pissed off some politicians because he said the quiet parts out loud about how the pharma industry works), if you lose it's fraud. When all the winners are doing it, hard to compete otherwise... not that it makes it right.
  - privatelypublic 1y ago
    What are you thinking the crime would be? He bet his company on a literal toss of the dice instead of the routine figurative ones. Outside of Bribery and ?SarBox? (Whichever regulation handles kickbacks, etc), I can't think of anything.
    - mothballed 1y ago
      If you spend investor money at a literal casino while advertising a non-casino related business, and pay the investors back, probably people will view you as not committing a crime. If you get investor money or get a loan on the basis of funding logistics investments, bet it on roulette red, and go bankrupt, I would expect you'd be looking at hard jail time for fraud. So I'm thinking the crime would be nothing, because he was a winner, and the optics totally changed, and fraud relies on very subjective opinions of a jury.
      - bryanlarsen 1y ago
        There are lots of examples of people going to jail despite investors getting their money back, like SBF and Shkreli. Even Madoff investors got 94% of their investments back.
        mothballed 1y ago
        Shkreli is the only one of those 3 that fully paid back his investors, and it took him pissing off virtually every politician and a bunch of wealthy insurance executives/administrators to get enough resources mobilized to get a conviction (and being one of the most uncharismatic people on earth, which didn't help him at trial). I think you are definitely in a much worse place for a fraud conviction if you lose money.
        bryanlarsen 1y ago
        News stories said SBF investors were going to get 118% of their money back. Did that not happen? https://techcrunch.com/2024/05/08/ftx-crypto-fraud-victims-to-get-their-money-back-plus-interest/ https://techcrunch.com/2024/05/08/ftx-crypto-fraud-victims-t...
        mothballed 1y ago
        No because the assets ('money') deposited to SBF were crypto, and you just gamified it by doing a currency exchange to USD while disingenuously failing to note that in that time the USD value of the crypto went up. If you want an accurate reflection, note how much of the crypto deposited went in, and then how much came back out after SBF lost it. This would be like me depositing USD, someone stealing some of it, then you bragging the value went up because I have a larger quantity as measured in Venezuelan Bolivars. What actually happened is their % they recouped was less than 100 until you artificially change to an entirely different currency.
  - potato3732842 1y ago
    > (unless you're Shkreli, don't think his investors lost money, but he pissed off some politicians because he said the quiet parts out loud about how the pharma industry works) What's the TL;DR? His wikipedia page doesn't make it obvious.
    - mothballed 1y ago
      Shkreli's schtick was to buy out or control pharma companies that had a monopoly and jack the everliving fuck out of the prices. He had some programs for uninsured people, but he would milk the insurance companies absolutely dry, which gave him some wild profits. This made a bunch of powerful people absolutely enraged, as he was basically publicly bragging about jacking the ever living fuck out of the prices. Pharma companies do this but Shkreli would publicly say it and tell the truth that basically the other companies were doing it while pretending to be good people, and he was only being honest about it. Poor people were pissed because they were told they couldn't get their drugs (I'm unaware if the program that allowed uninsured people to get them for cheap was real or not), and the rich insurance people pissed because he was basically he was bilking them. So they went back and discovered one or some of his other early enterprises weren't profitable, but that he had used money he made off his later pharma enterprises to pay back his earlier investors. In trial, his investors testified they were happy with the situation, lost no money, and would invest with him again. But they still convicted him for fraud, even despite the 'victims' themselves did not believe they were defrauded. It didn't help that Shkreli is probably one of the most profoundly unlikeable people you can possible listen to, unless you're not bothered to hear a hyper-capitalist be honest about how they do business.
      - potato3732842 1y ago
        Sounds like basically the big boy version of how all the other psychiatrists who run plausibly deniable pill mills will screech about the one running a flagrant pill mill until they lose their license.
      - notmyjob 1y ago
        Victims not wanting prosecution doesn’t absolve the perpetrator as wife beaters learn all the time. I also think Skhreli’s biggest mistake was threatening Hillary Clinton.
  - 1123581321 1y ago
    There is truth to this. She was exposed because JP Morgan ran a marketing campaign that converted extremely poorly. Better purchased data might've prevented significant forensics. The poor due diligence had already been signed off. While she committed fraud, I feel sorry for her because of her naivety. It must've been a sick moment when they asked to examine the data during due diligence. If she'd known that would be used for marketing integration so quickly, maybe she would have backed out of the deal.
    - miltonlost 1y ago
      From the complaint: > In particular, CC-1 and JAVICE asked Engineer-1 to supplement a list of Frank’s website visitors with additional data fields containing synthetic data. > Engineer-1 was uncomfortable with the request and stated, in sum and substance, “I don’t want to do anything illegal.” JAVICE and CC-1 claimed to Engineer-1 that it was legal. JAVICE stated to Engineer-1, in sum and substance, “We don’t want to end up in orange jumpsuits.” Engineer-1 declined the request from JAVICE and CC-1. She's not naive. She was told this was illegal and then did it still. She knew this was fraud.
      - 1123581321 1y ago
        Yes, read the same. Naive in thinking she could get past that and they wouldn’t do anything particularly revealing with the data. A smarter fraudster would’ve backed out earlier with less damage.
    - IncreasePosts 1y ago
      She's so naive, she just hung around until someone found out the fraud. It made me wonder what she was thinking when her $30M share landed in her bank account. "Whee, I got away with it", "it's their problem now"? I don't think I would commit fraud, but if I did it for that amount, I would be on a flight to Malaysia or some other place with no extradition with the US!
  - curiousObject 1y ago
    why isn't the founder of UPS in prison? I don't think it was legal to go and literally spend their money at the casino That was FedEx’s founder, Fred Smith. It wasn’t UPS He only had $5,000 of funds remaining, which he gambled playing blackjack, so the potential loss to investors was small. He’d already lost almost all their investments through operating FeDex
    - FireBeyond 1y ago
      The investors? At that point he had been stiffing his pilots on wages for weeks or months, and with many also paying fuel bills on their personal credit cards/checks, since many fuelers had canceled FedEx's accounts. Yeah, $5K isn't a whole lot, but if I'm a pilot struggling to put food on my family's table, and the CEO takes company money to Vegas, I'm not thinking "Oh, but the investors" or "Sure, it's not that much money anyway". I don't see why people (not saying you, in particular) see this as some heroic founder "risking it all". He wasn't. He was risking the company's "all", after asking the employees to suck up his mismanagement.
      - curiousObject 1y ago
        some heroic founder "risking it all". He wasn't. He was risking the company's "all", after asking the employees to suck up his mismanagement. I agree. He was asking employees not to cash their paychecks sometimes. $5000 is inconsequential compared to that forced investment from employees and business partners
      - red_rech 1y ago
        [dead]
  - IncreasePosts 1y ago
    There's no knowledge as to whether he used company money, or personal cash/line of credit. In fact, there's no knowledge of the story is even true, apart from what one dead man wrote!
troyvit 1y ago
I was about to go on a rant about, "Why is it ethical to put people in jail for doing things that only affect money? Was anybody at JPMorgan hurt as bad as jail will hurt this person?" But you already answered the question.
- fourseventy 1y ago
  If I steal all your money I shouldn't go to jail?
  - troyvit 1y ago
    I personally believe money crimes should have money punishments and corporal crimes could have corporal punishments. If you steal from me and go to jail how did I benefit? If you steal from me and I get a bunch of $ for pain and suffering and you get your pay docked for n years that seems good.
- deleted 1y ago
  [deleted]
taytus 1y ago
same as Theranos
arbuge 1y ago
She
ChrisMarshallNY 1y ago
> He broke an unwritten, cardinal rule, which is to never steal from the rich. "She". The name is "Charlie," but it's a young woman. And, like another young woman, she stole from the rich, and got jailed. She'll probably get a federal minimum-security prison (no fences and a golf course). They aren't quite "Camp Cupcake," but they are a far cry from places like Leavenworth (I've known folks that have done time in both).
Aurornis 1y ago
Believe it or not, smaller fraudsters get prosecuted all the time, too. One of the news reporters I followed on Twitter in my area liked to follow all of the small cases of real estate and business fraud in my area. There were a lot of prosecutions for people who were stealing <$10K at a time through affinity fraud and fake business investments. You just don't hear about them as much because someone going to jail for stealing $60K from a couple families from their church in a fake real estate scheme isn't as exciting as a massive fraud against JP Morgan.
- HankStallone 1y ago
  A few years ago the manager of our local Menards got convicted of stealing over a half-million dollars over 5 years. She only got 180 days, too, and was allowed to leave the jail for work. Depending on how high on the hog she lived for those five years, she might figure it was worth it. I knew one local HVAC company where the office manager skimmed off six figures over something like 20 years before she got caught. Just slow and steady, never taking enough to be obvious, I guess. It happens more than people would think.
  - wil421 1y ago
    I knew a guy whose parents basically invented thrift stores. He’s accountant did the same thing while he was battling drug addiction. Not sure if she ever got prosecuted I think the owner wanted to move on. Then he died of a heart attack.
rdtsc 1y ago
> He broke an unwritten, cardinal rule, which is to never steal from the rich. Right from the article > Addressing the court before she was sentenced, Javice, "she was" ... The title even: > Charlie Javice sentenced to seven years in prison for fraudulent sale of her startup "her startup" ... Kind of curious, how did you determine their gender? Guessing, saw the title on HN only without clicking on the link assumed it must be a "him"?

rchaud 1y ago

> Javice appeared regularly on cable news programs to boost Frank’s profile, also once appearing on Forbes’ “30 Under 30” list. ...alongside other scrupulous business luminaries like Sam Bankman Fried, Shkreli and Holmes.

jordanb 1y ago
The Management Consulting to Prison Pipeline.

renewiltord 1y ago

Lol the biggest loser here is the ad tech company that was used to validate the entirely generated emails and somehow gave JPMC the belief that the emails matched in the DB. Get fucking rekt.

generalpf 1y ago

Another Forbes 30 under 30!

duxup 1y ago
It's funny how a lot of those media blurb lists are just "this person says they're doing things at a functional business".

TuringNYC 1y ago

>> A prosecutor, Micah Fergenson, though, said JPMorgan “didn’t get a functioning business” in exchange for its investment. “They acquired a crime scene.” I do not understand how an acquisition this big got thru due diligence without noticing all the fake users. Anyone in corporate M&A know if it is normal to spend this much money without inspecting the goods? Seems like the most basic of OLAP queries and two days of effort would reveal very suspicious userbase.

upupupandaway 1y ago
One previous company I was CTO of got acquired by Amazon and they spent 60 days going through everything, including every line of code. I doubt a fraud of this caliber would have gone unnoticed with that kind of due diligence.
- vjvjvjvjghv 1y ago
  Sometimes I wonder if there is a lot of scrutiny in small things but when things get large and complex they basically give up and wave it through. I see a similar thing at my work in medical devices. In theory we have to validate all libraries we are using. So if you want to share some code you have to create a ton of documents. But when we use something like nodejs with hundreds of dependencies the whole process basically gets handwaved away because validating everything would be too much work.
  - brandall10 1y ago
    It's not that complex, there was nothing technical here. You could say this was 'social engineering' at some level. She pushed back against access to the customer list claiming privacy laws as a shield. JPMorgan was overly eager and didn't want to blow up the deal by challenging her.
  - chatmasta 1y ago
    I wouldn’t be surprised if they waved it through because “who would be dumb enough to provide us a fraudulent list of customers?” She was always going to be discovered once they tried to market to the list. So I could see them speedrunning due diligence under the assumption that, if it’s totally fraudulent, it will be obvious eventually and then we’ll sue her. The deal is not large enough to affect our bottom line, and the obvious risk of defrauding us makes it unlikely she’s defrauding us.

vjvjvjvjghv 1y ago

[flagged]

twixfel 1y ago
Yeah I'm surprised she didn't donate to the Trump campaign, seems like a huge misstep on her part.
pessimizer 1y ago
No different than ozy.com's story, and Carlos Watson got the pardon. It helped that he was basically Powell-Jobs's pet (one of the owners of the Democratic Party), then kissed Trump's ass on top. His entire deal was making connections with rich white people who wanted a black friend to tell them they were not only good people, but the best people. Excellent work if you can get it. I don't think you can start this charm offensive after the crime, though. The only person I've ever seen manage that is Rob Blagojevich. As has been said, the value of standing under a huge tree is more the shade, not the fruit. Your rich friends may never do anything for you, they might only value your friendship because you're one of the few who have never asked them for anything. But, consistent with that, if somebody attacks you they'll defend you as hard as they defend their other possessions. That kind of armor enables you to pluck fruit from other trees.
wnevets 1y ago
There is still time to buy some Trump crypto

randycupertino 1y ago

My favorite thing about this case is how she bragged to her lead engineer she wouldn't go to prison, "“Don’t worry — I don’t want to end up in an orange jumpsuit" when she was trying to convince the engineer to fabricate their user data. From the complaint: > In particular, CC-1 and JAVICE asked Engineer-1 to supplement a list of Frank’s website visitors with additional data fields containing synthetic data. > Engineer-1 was uncomfortable with the request and stated, in sum and substance, “I don’t want to do anything illegal.” JAVICE and CC-1 claimed to Engineer-1 that it was legal. JAVICE stated to Engineer-1, in sum and substance, “We don’t want to end up in orange jumpsuits.” Engineer-1 declined the request from JAVICE and CC-1. > shortly after Engineer-1 had declined the request to create a synthetic data set—CHARLIE JAVICE, the defendant, contacted Scientist-1 and asked him to create the synthetic data set. In JAVICE’s communications with Scientist-1, she falsely represented that the data she provided to Scientist-1 was a random sample of a much larger database of Frank users. > Also on or about August 3, 2021, JAVICE forwarded to Scientist-1 the Access Link Email sent to her by Engineer-1. JAVICE wrote, “here is the link. will share credentials offline.” Based on Scientist-1’s communications with JAVICE, Scientist-1 understood that the data available via the Access Link Email—a data set of approximately 142,000 people—was a random sample of a larger database which contained data for approximately 4 million people. source: https://www.justice.gov/usao-sdny/press-release/file/1577861/dl https://www.justice.gov/usao-sdny/press-release/file/1577861...

ajross 1y ago
> she bragged to her lead engineer she wouldn't go to prison So... obviously she was wrong. But the line between "just cutting a few corners" and prosecutable criminality isn't nearly as bright as we in the peanut gallery like to think. Lots of very successful startup launches (Uber and AirBnB are famous examples) were kinda/sorta/prettymuch illegal by the plain language of the laws they were (not) operating under. And they got stinking rich! PG himself has an example in one of the very early essays about how Viaweb kinda just skipped most of the early bureaucracy and accounting they were supposed to have been doing, figuring it would all just work out. And it did. Kids see those examples and figure that a little cheating here or there probably isn't going to send them to jail. And it usually doesn't. Except when it does. And the distinction, for a lot of people in this community and right here on this forum, is very much a "There but for the grace of God go I" phenomenon. Startup culture tells you to cheat, basically. Knowing how not to cheat isn't in the instruction manual.

firefoxd 1y ago

At an investor event, a desperate journalist was running around the room asking people their age. He ended up at our table, with a drink in hand, and a defeated look on his face. He had given up. We talked a bit, and he asked me, "are you under 30?" I answered "No. But this guy is." I pointed at the 28 year old cofounder of the start up I was part off. Before the evening was over, my colleague made it to the list of forbes 30 under 30.

robertlagrant 1y ago
Do you know the journalist's name? I'd love to be part of Forbes' 10 billion under 10 billion.
- teachrdan 1y ago
  The Onion had a listicle entitled "80 Under 80 -- and five 79-year-olds to watch out for." Once again they nailed the inherent vacuousness of modern news.
Aurornis 1y ago
The people I know who made the 30 under 30 list approached it like a massive campaign they had to win. It was a full-court press to get in front of the right people and their startup's PR releases were all timed to impress for the 30 under 30 during that period. Maybe times changed since it became more of a running joke. At one point it was a selling point for fundraising that people would compete hard over.
- code4tee 1y ago
  Every person I personally know on this list made it their life mission to be on the list. It was lost on them that the whole thing has become a running joke that everyone else thinks is just full of grifters.
  - selimthegrim 1y ago
    The one person I know who made that list drunkenly confessed to doctoring his high school transcripts to get into college.

whimsicalism 1y ago

> In seeking a 12-year prison sentence for Javice, prosecutors cited a 2022 text Javice sent to a colleague in which she called it “ridiculous” that Holmes got over 11 years in prison. This seems utterly irrelevant to the sentencing, but what do I know.

tptacek 1y ago
Goes to remorse.
Aurornis 1y ago
Sentencing can be impacted by several factors like this. If the criminal shows a blatant disregard for the law and views lawbreaking as a risk-reward tradeoff to get what they want, they're more likely to commit crimes in the future. If there had been more evidence that she reluctantly went with the scheme under desperation or pressure and held immense regret and remorse, in theory that would suggest a shorter sentence. If I recall correctly, Elizabeth Holmes' lawyers tried to push the angle that she was pressured into committing the frauds as a way to lower the temperature of the case.

wkoszek 1y ago

It's interesting how nobody talks about due-diligence being completely broken. We raised $$$ from many VCs and the DD for some of them was crazy: line item by line item with calls to customers etc. Tech folks were on phone with me and had to explain them stuff step by step, revealing a lot of confidential recipes. Also did this for bigger customers. And the $175M deal.. isn't there an earnout? Like $10M cash now, 1/4*$175 wired on 1yr cliff, and then the rest over 4 years if some milestones are hit? The whole thing looks weird.

Aurornis 1y ago
> It's interesting how nobody talks about due-diligence being completely broken. The majority of the talk around this case has been about the due diligence failures. The judge even called it out. Consumer businesses are harder to vet. It's not like a B2B with a dozen top customers where you can call them all and confirm that sales are happening. Non-response and customer churn is expected to be a high and changing number. From what I read she also invoked various privacy law excuses to give them the run-around while they were pressured to close the deal. But JPMorgan's failures don't excuse the criminal actions. If someone enters your house and steals your computer, it doesn't matter if you negligently left the door unlocked. A crime is a crime.
- NickC25 1y ago
  >From what I read she also invoked various privacy law excuses to give them the run-around while they were pressured to close the deal. And that should have been a massive red flag for JPMC. They should have nope'd out of that deal on the spot. I run a hybrid B2B and B2C consumer packaged good company. I have a few small investors. They know who my top clients are, because they ask in good faith, and I answer in good faith.
  - Aurornis 1y ago
    > I run a hybrid B2B and B2C consumer packaged good company. I have a few small investors. They know who my top clients are, because they ask in good faith, and I answer in good faith. Right, because it's easy to share your customer list when you have a small number of customers and they are repeat customers. Her company helped with student loans. Her customers were mostly one-time customers. The customer count was supposed to be indicative of how many new college students they could expect to sign up each year.

code4tee 1y ago

I see the string of “30 Under 30” being a statistically valid predictor of future likelihood to go to prison continues. These lists feed on the narcissistic tendencies of grifters who are desperate to get on the list and then tell you about it on LinkedIn. These lists have such a bad reputation these days that legit top folks are asking their PR people to keep the off!

mi_lk 1y ago
fwiw whoever makes 30 under 30 list also acknowledges it: https://www.forbes.com/sites/forbesunder30team/2023/11/28/hall-of-shame-the-10-most-dubious-people-ever-to-make-our-30-under-30-list/ https://www.forbes.com/sites/forbesunder30team/2023/11/28/ha...
disqard 1y ago
Reading Kornetzke's summing up of America, this fragment reminded me of SV and VC culture in particular: "greed exalted as ambition" You can google "It is America’s shadow made flesh" to find the entire passage.

code4tee 1y ago

Another “30 under 30” grifter goes to jail. Separately, I hope a few folks at JPMC got fired over this. Even the most basic of due diligence should have caught this.

arunc 1y ago
Less likely to happen. They had their pay days!

drcongo 1y ago

Has anyoine from JPMC gone to prison for 2008 yet?

deleted 1y ago
[deleted]
SpicyLemonZest 1y ago
A number of people from JPMC have gone to prison for financial crimes in general, including some (e.g. https://www.justice.gov/archives/opa/pr/former-jp-morgan-traders-convicted-fraud-attempted-price-manipulation-and-spoofing-multi-year https://www.justice.gov/archives/opa/pr/former-jp-morgan-tra...) which occurred during 2008. Nobody from JPMC has gone to prison for causing the 2008 financial crisis because there's no evidence that someone from JPMC caused the 2008 financial crisis.

geor9e 1y ago

I wonder what really happened here: "The judge said Javice had assembled a “very powerful list” of her charitable acts, which included organizing soup kitchens for the homeless when she was 7 years old and designing career programs for formerly incarcerated women." At least for all my classmates doing the college application process, claims like that were almost always wild exaggerations of what we really did.

masfuerte 1y ago
It seems like the effect of these college requirements is to teach ambitious young Americans that the way to get ahead is to cheat.
- wat10000 1y ago
  It's a valuable lesson.
  - qingcharles 1y ago
    They need to spend more time on the "not getting caught" chapter, I guess.
- ryandrake 1y ago
  Unfortunately, it's an arms race of cheating. Everyone else was the president of 5 school clubs, volunteered at a soup kitchen and animal shelter for 2 years, tutored disadvantaged kids for 4 hours a day, was a varsity athlete in 3 sports, played the trombone in band, and won 10 academic awards... so everyone has to say that in order to at least seem like an average candidate to college admissions.
  - ChrisMarshallNY 1y ago
    I dropped out and got my GED. I don't think there's one thing in my K-12 transcripts that would look good. I was not exactly a valedictorian-level student. Done a bunch of stuff, since then, but it's not right to throw onto LinkedIn. It's the kind of stuff we don't take credit for.

SapporoChris 1y ago

Is it correct that Charlie Javice is keeping the majority of the profits she made from the sale of Frank? If so, it's quite possible she considers the profit well worth the penalty.

tptacek 1y ago
No. She's required to make restitution far in excess of the total proceeds of the sale, including as a minor component a sum that captures her own personal proceeds.
- SapporoChris 1y ago
  Ah, thank you. I found the details here. https://www.justice.gov/usao-sdny/pr/startup-ceo-charlie-javice-sentenced-85-months-prison-175-million-fraud https://www.justice.gov/usao-sdny/pr/startup-ceo-charlie-jav... “Javice perpetrated a $175 million fraud—repeatedly lying about the success of her startup company and even hiring a data scientist to create fake data to back up her lies. For that, Javice has been sentenced to 85 months’ imprisonment and ordered to pay over $300,000,000,”
  - qingcharles 1y ago
    I don't know how they run that in federal prisons, but in some states they'll just put that balance on your commissary account, so you'd go to buy some noodles and you'd be -$300m before you start.
    - harambae 1y ago
      I don't think they do that in FCI's (I have a friend in right now). They do, however, have a cap on the commissary of like $400 a month or so. So even if you're a billionaire it's not super helpful (although you can probably cut deals to add a little bit to other people's accounts, etc..)
- sally_glance 1y ago
  Maybe JP did actually smell something during DD but decided to go ahead because of FOMO and confidence that they could just sue later if their concerns turned out to be true...

onlyrealcuzzo 1y ago

It's interesting to me that fraud appears to be a crime again, with Theranos and now this, when it was going on for so long and so obviously, and no one seemed to care when people were lying and frauding as long as it went on long enough for them to make a profit.

cheema33 1y ago
This lady could say that she was a victim of Biden justice dept. Say good things about Trump and follow it up with a large donation to Trump. That ought to be enough to get a pardon. This is exactly what the convicted fraudster Trevor Milton, founder of Nikola Motors did, to get a pardon. When signing the pardon, Trump said that he doesn't know anything about Trevor but heard that he likes Trump.
- deleted 1y ago
  [deleted]

joshmn 1y ago

Former federal inmate here who was recently released from prison a month ago today (I did 18 months): The big deal here was the loss amount, which can be construed any number of ways whether we like it or not. This will jack up the points and tilt the scale for the sentencing guidelines, and believe me they are archaic. After all is said and done, Charlie Javice will be hanging out at a prison camp—probably down there with Holmes and Maxwell, because it's cushy—and do no more than 4 years on the 7 assuming she completes all her programming requirements.

64d032fe 1y ago
Reading about you a bit. Would you say I shouldn't go and try to create the replacement for Streameast?
electroglyph 1y ago
did u transition out in corecivic?
- joshmn 1y ago
  I got picked up by my partner, thankfully. I was a self-surrender too. I did hear that they yanked out all the valuable assets from Cimarron (OKC's out-of-custody transfer facility) and now all the doors are manually keyed, amongst other things.
next_xibalba 1y ago
[flagged]
- zoklet-enjoyer 1y ago
  His views on sentencing have nothing to do with if he believes he did anything wrong.
- paulpauper 1y ago
  who cares if he take accountability or not. he served his time.

greenavocado 1y ago

Does anybody have the number for how much she will likely make off with ultimately ten years from now once everything settles?

verteu 1y ago
I don't think she gets to keep the money - the prosecution claims she'll be "forced to pay over $300,000,000" in restitution.
- greenavocado 1y ago
  Ignoring this posturing from the prosecution, what is the precedent?
- yokumfloster 1y ago
  And not only does she have to pay $300M – she didn’t even get the $175M that JPM paid. A lot of that — the majority most likely — went to her investors.

ashu1461 1y ago

What decides if a founder will get convicted or walk free like Adam Neumann did / Builder.ai guys did ?

tamimio 1y ago
Connections.
- AirMax98 1y ago
  And make sure you steal from the right people.
  - arunc 1y ago
    Vulnerable
thruway516 1y ago
Steal from the public not powerful well-connected financial institutions

tamimio 1y ago

Banks scamming people is fine and legal, but don’t you dare to scam banks, know your limits, peasant!!

danpalmer 1y ago

This feels like a case of both parties getting caught up in their own bullshit. It seems unlikely that the founder was intentionally fabricating data in order to commit fraud. Far more likely is that the founder was caught up in Silicon Valley startup culture, told they were disrupting industries and changing the world, and didn't put enough into actually doing the work, and ended up thinking their company was much more important than it was. Throw in some of the toxicity of #girlboss culture (this is a criticism of the negative aspects, we do need more female founders), and you get a Dunning-Kruger situation. I can see how someone would then keep digging rather than pull out if things started to turn. On the other side, JPMorgan obviously didn't do any real due diligence. They were too caught up in the industry hype, and want to continue their cosplay as a tech disruptor. Finding this would have taken almost no effort, there wasn't much attempt to hide it. Promoting what the company wants to be true rather than what is actually true is a clear sign of a rotten culture – people won't speak up even when there is literally no good outcome that can come from staying silent. JPMorgan got exactly what they deserved with this deal. I feel sorry for the founder getting caught up in the cultural currents that led to this, and while they need some accountability, a prison sentence probably isn't right.

dboreham 1y ago
Yes it was dumb and dumber, but once you get to writing programs to fabricate user data for DD purposes, you're in the Bernie Madoff camp. He also defrauded dumb people, and various smart people concluded he had to be a criminal. Still a criminal.

KnuthIsGod 1y ago

"In 2022, JPMorgan filed a lawsuit for fraud, claiming that the data reported by Frank was largely a fabrication and alleged that Javice paid a data science professor $18,000 for a list of more than four million fake student names to convince JPMorgan to purchase Frank."

franktankbank 1y ago
How do you pay that much money to get synthetic data? What a racket. I wonder if the professor feels shame for their complicity here.
- postexitus 1y ago
  Could have waited for a few months and got an LLM do it for her.
- iamleppert 1y ago
  There is a specific distribution of names of people that is very hard to fake. Think all the different first names, last names, their spellings and common names. Generating that many realistic fake names that still match the distribution of real names is hard.
  - franktankbank 1y ago
    So if a distribution exists and the data scientist is aware of it and knows hed need to match it within some deviation then that is pretty trivial to do in not too much time of coding and not too much runtime. If guy doesn't have that and doesn't know hes party to a fraud then its just as easy, random match first names and last names from a limited list. There's no training scenario imaginable that would be taking into account some particular name details. Guy was probably paid near 10k per hour, which I don't know, might trip me up a bit.
    - iamleppert 1y ago
      When I said it's "hard" I mean for the average non-technical person, or someone who doesn't have access to a real-world dataset with millions of names for comparison. You can easily find such datasets on the dark web, FYI.

camillomiller 1y ago

The startup world is made up of grifters of all sorts that make up BS all the time. And yet, in the end it’s always the women that get spectacularly sentenced? The only exception I can think of is SBF, but that was a quite different case.

tpoacher 1y ago

> Javice was among a number of young tech executives who vaulted to fame with supposedly disruptive or transformative companies, only to see them collapse amid questions about whether they had engaged in puffery [...] I'm assuming the key punisher here is the "collapse" rather than the "puffery". I don't think I've seen an "honest", "unpuffed" company since the 90s when companies were still wishing their customers merry christmas over the radio.

black_puppydog 1y ago

> “haunted that my failure has transformed something meaningful into something infamous.” Not a US resident, so this may be off-base, but IIUC this a student loan platform, or rather actually just a better interface to it?

le-mark 1y ago
It was a service that aided in filling out a well known federal form (for student loans). Similar to how there are multiple companies that sell a service to fill out (prepare) federal forms for income tax. Why are these forms so complex? The eternal question. The tax forms companies actually lobby against simplifying.

seivan 1y ago

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