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

businessinsider.com

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

#41

Post by WFHRenaissance »

TacticalCoder wrote: post #37
fn-mote wrote: post #19

How much due diligence really occurred here? I have no problem with charges being filed, but seriously... it's not like the buyer was some kind of low-budget mom and pop shop or community bank. I'm just not very sympathetic to JPMorgan for being scammed in a situation where being wary should be standard.

> How much due diligence really occurred here? A just question. How much due digilence was done on SBF / FTX by The New-York Times and by the VCs who poured hundreds of millions into a pure fraud?

At least FTX actually had users and customers...

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

#42

Post by wongarsu »

gruez wrote: post #27
koolba wrote: post #17

Earlier quoted context omitted.

$175M could have easily paid for a bunch of domains to run MX servers. You don’t even have to keep the email. Just accept it and send it to /dev/null. Maybe a fancier scam would be parsing for links and randomly fetching them with headless chrome. But I doubt that’d be required.

> $175M could have easily paid for a bunch of domains to run MX servers. You don’t even have to keep the email. Just accept it and send it to /dev/null. You don't think it would be at all suspicious that most of the emails in the customer list are using weird custom domains rather than the popular ones like gmail.com or outlook.com?

The first vendor I found via Google offers 500 phone-verified gmail accounts for $150, so about $1.2M to fake all 4M users. At that volume you can probably get a discount and have them generate gmail addresses according to your specifications (to make them plausible matches for the rest of your fake data). Mix in some bought outlook accounts and some obscure domains you run yourself for extra plausibility.

Actually opening the emails without triggering Google is a bit more difficult, but I imagine a good residential proxy service (either legitimate or botnet) and a bit of scripting can solve that for another couple thousand USD.

Of course doing all of this makes you look more criminal and JPM look less dumb, so I'm not sure if this is actually a good idea even if you start off with the idea of defrauding the buyer.

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

#43

Post by yowzadave »

throw_m239339 wrote: post #15
ChrisMarshallNY wrote: post #7

This exact kind of fraud, is just what AI should be good for. I made 10K fake users for testing the app I'm developing now. I used thispersondoesnotexist.com, and about a half hour's worth of PHP programming, to make an open-ended user generator. I only need 10K users, and it takes about an hour or so to generate them, but I'm sure that this type of thing could be easily scaled. "Hey, ChatGPT, can you give me the SQL…

I mean you can go even further, you can use ChatGPT to make these fake people answer real emails from JP Morgan. You can completely fake people online. Of course JPM wouldn't have gotten any business from these bots, but it would have been harder to prove that these 4 millions emails were fraudulent. 100% Fake business, fake customers. $175M valuation. What I don't get is why JPM didn't realize that this company had…

What would be the email domains of all these fake users? I'm presuming Gmail has defenses against someone creating millions of fake addresses via automated means. Maybe you'd have to buy a bunch of email addresses on the black market from some hacker. Sounds like a lot of effort and fraud for something that will certainly be found out sooner or later and result in you going to jail.

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

#44

Post by ffggvv »

mrbombastic wrote: post #28
fn-mote wrote: post #19

How much due diligence really occurred here? I have no problem with charges being filed, but seriously... it's not like the buyer was some kind of low-budget mom and pop shop or community bank. I'm just not very sympathetic to JPMorgan for being scammed in a situation where being wary should be standard.

Yeah I am always astounded at stories like this, you acquired a company for 175 million dollars and didn’t even peak at some real data?

that’s pocket change for them. probably just file it under DEI budget for supporting a female founder

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

#45

Post by fisherjeff »

mrbombastic wrote: post #28
fn-mote wrote: post #19

How much due diligence really occurred here? I have no problem with charges being filed, but seriously... it's not like the buyer was some kind of low-budget mom and pop shop or community bank. I'm just not very sympathetic to JPMorgan for being scammed in a situation where being wary should be standard.

Yeah I am always astounded at stories like this, you acquired a company for 175 million dollars and didn’t even peak at some real data?

I mean from what I understand, they did peek at the “real data”, it’s just that it was convincingly fabricated.

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

#46

Post by yowzadave »

mostlystatic wrote: post #18
eloff wrote: post #14

Earlier quoted context omitted.

If they’re that incompetent that they need to fake their database and think it’s a good idea, there’s little surprise that they’re also too incompetent to realize that task is only a couple hours of coding.

You pay extra to hide the crime: """ After the August 3, 2021 Zoom meeting, the Data Science Professor returned a signed version of Frank’s NDA. The Data Science Professor’s usual hourly rate was $300. Javice unilaterally doubled the Data Science Professor’s rate to $600. [...] Specifically, on August 5, 2021 at 11:05 a.m., the Data Science Professor provided Javice an invoice for $13,300, documenting 22.17 hours of…

I wonder why the Data Science Professor isn't named/charged as an accomplice. Maybe they are acting as a witness for the prosecution?

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

#47

Post by loandbehold »

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.

Javice interfered in due diligence in a very sophisticated way. JPMC tried to verify user data but Javice claimed they couldn't provide user personal information "due to privacy concerns". In the end Javice was able to convince due diligence team by engaging in multiple layers of fraud. Sure due diligence team could've done a better job, but Javice was a sophisticated adversary. It's not like due diligence team didn't have any concerns. But they wanted to balance their concerns against possibility of passing a good deal due to formality.

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

#48

Post by CrazyStat »

TacticalCoder wrote: post #37
fn-mote wrote: post #19

How much due diligence really occurred here? I have no problem with charges being filed, but seriously... it's not like the buyer was some kind of low-budget mom and pop shop or community bank. I'm just not very sympathetic to JPMorgan for being scammed in a situation where being wary should be standard.

> How much due diligence really occurred here? A just question. How much due digilence was done on SBF / FTX by The New-York Times and by the VCs who poured hundreds of millions into a pure fraud?

VCs, yes, they should have done more due diligence. But putting the NYTimes on the same playing field, as if they can be expected to have the same access to business records as investors, is dumb.

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

#49

Post by nradov »

mostlystatic wrote: post #24
bamazizi wrote: post #11

Really surprised at lack duedeligenoe on the part of acquirers, JPM team!!! My immediate reaction to when JPM found out they'd be duped after running an 'email campaign' was, hmmm, maybe well deserved, should have done your homework! I want to put the blame solely on the executives, lawyers and team that drove the acquisition forward. Obviously we can open the floodgates of conspiracy theories. Maybe, some from JPM t…

I wondered about that when reading the Money Stuff article about it a while ago. What should they actually have done differently? One of the issues was that "she could not share her customer list due to privacy concerns". So maybe JPM could have pushed back against that more? """Javice also cited privacy concerns in sharing Frank’s customer data directly with JPMC. After numerous internal conversations, and in order…

In most jurisdictions it would generally be possible for the seller to hire outside counsel to validate customer metrics claims under attorney-client privilege without violating consumer privacy laws or customer agreements. The outside attorney could then provide a letter to the buyer attesting to what they found without revealing any specifics about individuals. Of course that would delay the deal, and the buyer here seems to have been irrationally eager to close the acquisition.

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

#50

Post by my_usernam3 »

yowzadave wrote: post #46
mostlystatic wrote: post #18

Earlier quoted context omitted.

You pay extra to hide the crime: """ After the August 3, 2021 Zoom meeting, the Data Science Professor returned a signed version of Frank’s NDA. The Data Science Professor’s usual hourly rate was $300. Javice unilaterally doubled the Data Science Professor’s rate to $600. [...] Specifically, on August 5, 2021 at 11:05 a.m., the Data Science Professor provided Javice an invoice for $13,300, documenting 22.17 hours of…

I wonder why the Data Science Professor isn't named/charged as an accomplice. Maybe they are acting as a witness for the prosecution?

Plausible deniability is my non professional guess
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