The Con Game: How a 30-Year-Old Woman Duped JPMorgan Chase

Forbes' "30 under 30" list.

A graduate of the prestigious Wharton School.

Founder of two million-dollar companies.

Can you expect a person with these golden credentials to deceive someone? I cannot, and neither did the world's largest investment bank, JP Morgan Chase.

But, guess what? A 30-year-old woman conned the world's largest investment bank by selling it an excel sheet with fake data for $175 million.

Is it not astounding that the company that boasts the best investment bankers and leads the most high-profile mergers and acquisitions in the world got conned? Their due diligence team certainly wasn't diligent while assessing the deal!

Well, it wasn't just their fault. The mastermind, Javice, had a plan so perfect that she managed to deceive the brightest minds in the world. Let's see how she did it!

It all began in 2016 when Javice founded Frank. A start-up with an aim of helping students apply for college financial aid. Javice started Frank with an ambitious goal of becoming "an Amazon for higher education" and with her Ivy League degree, she won the support of billionaire investor Marc Rowan and marquee investors like Aleph, Chegg, Reach Capital, Gingerbread Capital, and SWAT Equity Partners.

In a short period of time, Frank became a successful company (or Javice made it seem successful), serving around 5 million students by simplifying the process of applying for federal student aid. Javice's achievements led to her inclusion in Forbes' "30 under 30" list for finance in 2019.

Her success caught the attention of JPMorgan Chase. This little startup had something that the giant bank couldn't resist: data, data, data! You see, JPMorgan Chase's target consumers are college students and Frank just happened to have the information of 5 million of them!  So, JPMorgan Chase couldn't pass up the chance to acquire a company that held such valuable information. 

However, the poor bank was unaware that the company was built on a bed of lies, as Javice had falsely claimed to JPMC that Frank had more than 4.25 million users when in reality it only had 3,00,000.

Allegedly, when JPMorgan asked for proof during due diligence, Javice turned to her co-founder Amar for help. According to Fortune, both of them first went to Frank's Director of Engineering and asked him to create "synthetic data" - fake customer information generated by computer algorithms. Just like any person with a conscience, he felt uncomfortable and asked "whether the request was legal" and eventually declined.

After he declined, Javice and Amar had to find someone who was not just good with data but was also willing to do the unethical stuff! Javice happened to know a data science professor at a New York City area college and asked him to create the fake data of 4 million users. The professor agreed, according to the suit, and he was willing to provide "creative solutions" to Javice and Amar's data problems. The data science professor was tasked with creating data for nearly 4.3 million customers for Frank, including names, emails, and birthdays.

The professor and Javice exchanged a series of emails, discussing the details of the fabricated data. They went to great lengths to make sure their fabricated data was as believable as possible.

First, came the names of fake students. The professor reportedly sent an email to Javice proposing a model to distinguish between real and fake student names. The model would test first and last names separately to confirm that none of the names used were real.

Next came physical addresses. The task of creating believable addresses proved to be a real headache. The professor allegedly told Javice he had trouble finding believable addresses. He asked her "Should I attempt to fabricate them?", to which she said, "I just wouldn't want the street to not exist in the state."

For all the fake data, Javice paid him $18,000 and she managed to get $135 million for the same from JPMC.

JPMorgan was completely unaware of the alleged issues when they completed the $175 million purchase of Frank, but soon realized something was amiss when they conducted a marketing test campaign to Frank's customer list. According to the complaint, the results were "disappointing."

The lawsuit states that JPMorgan sent marketing test emails to what it believed were 400,000 unique Frank customers. Unfortunately, only 28% of the emails were delivered, compared to the 99% delivery rate JPMorgan usually sees with similar campaigns. To make matters worse, just 1.1% of the delivered emails were opened, compared to the 30% for a typical JPMorgan campaign.

Not so surprisingly, this wasn’t the first time Javice was faking the scale of business. In 2017, The Department of Education accused Frank of misleading the students. In 2017, the domain of its website was frankfafsa.com, which was confusingly similar to the Department of Education's website, fafsa.gov, "and, therefore, it was likely to confuse applicants.  

Simply put, it tried to portray itself as an affiliate of the Department of Education to dupe the applications.

So, you see it wasn’t the first time Javice was faking something. But as they say, Fake it till you make it!

You tell me, with these accusations, will Javice make it big?