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.<p>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?<p>This doesn't look good on either party.
First: the worst name for a company ever? Is it a person named Frank? Or a founder with a frank personality? Or a story about the kind of sausage called a Frank?<p>Anyway, wasn't there some business behind the supposed 4M users? You can fabricate 4M users in a csv file and insert them into your production DB, but shouldn't there be some revenue associated with those users, and couldn't the acquirers have looked to see if that revenue existed?
How much due diligence really occurred here?<p>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.
Really surprised at lack duedeligenoe on the part of acquirers, JPM team!!!<p>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!<p>I want to put the blame solely on the executives, lawyers and team that drove the acquisition forward.<p>Obviously we can open the floodgates of conspiracy theories. Maybe, some from JPM team may have been on this...
The gist of what she is alleged to have done:<p>“An internal investigation revealed that Javice and Frank chief growth officer Olivier Amar — referred to as "CC-1" in the federal charges — paid a New York data science professor $18,000 to create nearly 4 million fake accounts in order to juice Frank's user numbers, JPMorgan alleged in its lawsuit. Amar later bought a list of student email addresses from a marketing firm for $105,000 in order to make those accounts seem more credible, JPMorgan alleged”.
> began to question the authenticity of the startup's purported 4 million users after an email marketing campaign ended in "disaster," according to the bank's lawsuit and a filing by prosecutors. Out of 400,000 emails sent to Frank users, more than 70% bounced back and only 103 were opened, the bank claimed.<p>This seems entirely inevitable since the emails were largely not actual customers…<p>Very strange.
This exact kind of fraud, is just what AI should be good for.<p>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.<p>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.<p>"Hey, ChatGPT, can you give me the SQL for five million users, with the schema published here?"
Frauds like this one all-too-often wrap and camouflage themselves in some social good. Its so revolting, and brings down not only the cause but the people suffering from whatever the subject is (e.g. students applying for financial aid, cancer patients getting their blood tested, etc.)<p>Its unfair and awkward but ventures which heavily push the mission like this one should be pushed harder on their fundamentals by the investor / startup community.
I don't understand this fraud. The whole point of a fraud is to try to "get away with it", but I'm missing that part of the story. What did this girl think was going to happen?