Frank founder allegedly defrauded JPMorgan out of $175M hit with federal charges • Hacker News Board

Re: Frank founder allegedly defrauded JPMorgan out of $175M hit with federal charges

#121

Post by WheelsAtLarge » Wed, Apr 05, 2023, 4:54 PM UTC

jjgoldman wrote: post #13

Sounds very clearly that JPMC was defrauded, and at the same time did a very poor job of due diligence in a 9 figure acquisition. How did a financial audit not uncover the dramatic mismatch in actual vs. purported activity? How does a transaction value of $41 per user (x 4.25M users) not translate to an auditable revenue stream? This doesn't look good on either party.

Deals between 2 parties are usually entered with the idea that both parties are acting in good faith. It sounds naive after a fraud has been uncovered but we usually expect good things if we enter into a deal. Frank looked like a great aquacition from the outside so the audit was a formality that they had to "endure." Well, this time it was a complete fraud. Which Frank was able to cover up. I bet no one expected it to be so big.

Bottom line it's human to trust. It will always be very hard to uncover deceit when it's part of your business to make sure it continues and work hard to cover it up. Looks to me like the auditors never had a chance.

I'm surprised that the founder didn't just grab the money and moved to a country where there's no extradition. Last I read she was still claiming that the business was 100% legitimate.

Re: Frank founder allegedly defrauded JPMorgan out of $175M hit with federal charges

#122

Post by Incipient » Wed, Apr 05, 2023, 5:05 PM UTC

styren wrote: post #93

jononomo wrote: post #84

Earlier quoted context omitted.

What is a DD guy? and what does LOI stand for?

They are both pretty household terms that you could've easily Google.

DD was guessed within context. But the others were niche acronyms that were critical to a very insightful comment - definitely worth explaining.

Re: Frank founder allegedly defrauded JPMorgan out of $175M hit with federal charges

#123

Post by altacc » Sun, Apr 09, 2023, 10:13 PM UTC

dannylandau wrote: post #119

altacc wrote: post #51

Earlier quoted context omitted.

I listened to a documentary about the Crazy Eddie electronic chain, which was fraudulent to the core but passed audits. The ex-CFO made an interesting comment: when large accounting firms do an audit, they're checking what the business has recorded on its accounts adds up, they're not checking if the reality behind the accounts are correct. As long as your books balance, you look healthy.

what the documentary called and where can you stream it?

Going back through my history, it's actually an episode of the Criminal podcast: https://thisiscriminal.com/episode-211-crazy-eddie-3-17-2023...