It's a fact of life that crimes are way disproportionately committed by men. Mass murder. Serial killing. Breaking & Entering. Assault & Battery. Drug possession. Drug dealing. Fare jumping. Disorderly conduct.
You name it.
Boys will be boys; men will be men.
After all, fraud is non-violent (so more lady-like), and with more and more women in business, there's more and more opportunity for fraudsters of the female persuasion.
Even in the way back, there was Enron treasurer Lea Fastow, who got caught up in that fiasco. As I recall - and Enron is now two decades in the past - she and her Enron CFO husband Andrew got to stagger there prison terms so that one of them got to stay home with the kids.
And anecdotally, it does seem that a ton of the embezzlement cases you read about involve women.
Then there is, of course, the poster child for women in business gone bad: Elizabeth Holmes, who despite trying to weasel out of her sentence because she has two babies, was set to start her hefty sentence yesterday.
Just last week, I posted about two senior women at Magellan Diagnostics who have been indicted for fraud. (The Magellan scheme is something of a "Theranos light" situation. Like Theranos, the Magellan case involves fudging test results (Magellan: lead; Theranos: blood), but there was a lot less money involved. We'll see where that one goes.)
And now there's the criminal fraud case being brought against Charlie Javice.
Javice is the Wharton School grad who in 2016, when she was still in her early twenties, founded Frank, a company that helped ease the process for students filling out financial aid applications. Although she'd experienced a few bumps along the way, in 2021, Javice sold Frank to JP Morgan Chase for $175M. (Those bumps along the way? According to Wikipedia - and have they ever let me down - the US Department of Education claimed in 2017 that Frank was misleading customers, letting them think that the outfit was connected to the U.S. government, as a result she had to make changes to Frank's website; and in 2018, she got in a wage theft wrangle and had to pay $35K.)
Charlie Javice made $21M on the sale to JP Morgan Chase, and was looking at an equal payday as part of a retention bonus for staying on.
Turns out JP Morgan wasn't going to be all that interested in retaining Javice. They started to smell a data faking rat who had provided them with a fake list of customers to get them to buy her company, fired her in November 2022, and filed a lawsuit against her.
Part of what had driven the application was JP Morgan's interest in developing relationships with younger consumers. All those millions of Frank users were natural prospects.
Turns out that, when JP Morgan tried marketing to them, they found that millions of the emails were fake, and all those prospects never even existed.
And now it's not just JP Morgan chasing Charlie Javice down:
The Department of Justice filed criminal fraud charges, which were unsealed Tuesday [April 4], against Javice, Frank's founder and former CEO, alleging she "engaged in a brazen scheme" when she sold her company to JPMorgan Chase in 2021.
The Securities and Exchange Commission separately announced its own fraud complaint against Javice on Tuesday, seeking a variety of punishments including civil penalties and a ban on her being a corporate officer.
Both federal prosecutors and the SEC accused Javice of defrauding JPMorgan into believing Frank had 4.25 million users, when in reality the number was less than 300,000. (Source: ABC)
It's one thing to marketing fudge a bit. Eighty clients can become "nearly 100." But to claim your user base is more than an order of magnitude greater than it is? Wow, just wow.
Paying $175M for 4.25 prospects is a far cry from paying $175M for fewer than 300,000 prospects.
Javice pushed back on the JP Morgan claims.
She denied in court filings in February that she ever fabricated or misrepresented user data and merely told JPMorgan that her platform "had engaged with at least 4.25 million students."
"Engaged with?" I'd love to see what's in that number. 4.25 eyeballs on their website? 4.25 students at the colleges and universities they targeted? That "engaged with" sure was doing a lot of heavy lifting. And didn't JP Morgan poke at that number at all? Nah, Javice says. They just plain didn't do any due diligence, and that during their negotiations, Javice had warned her acquirer that student privacy requirements shouldn't be violated
Shame on JP Morgan if that's the case. How negligent not to have drilled down on that 4.25 number; how stupid not to have figured out whether those privacy stipulations would prevent them from marketing to the Frank users, which was, of course, a big point behind the acquisition. But it doesn't seem like much of a defense.
JP Morgan doesn't seem to think so. They maintain that:
...when Javice provided a spreadsheet with a column titled "FAFSA in Process" it indicated that more than 4.25 million students had opened accounts with Frank and provided detailed personal information to support that.
And then there's the Feds:
Federal authorities think the fraud went beyond a mislabeled spreadsheet column and that Javice tried to get her director of engineering to fabricate a data set. Javice then went to an outside data scientist to generate the fake data, according to allegations in prosecutors' criminal complaint against her.
We'll see where this one ends up, but it looks like Charlie Javice may have had a bit of larceny in her heart.
Who knows? Maybe she'll end up cellmates with Elizabeth Holmes, or one of the Magellan Two.
We've come a long way, baby, but I'm not all that thrilled that one of the categories we're reaching parity on may well be business fraud.
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