Founder with four million fake customers tricked JPMorgan out of $175 million

Today we're here to look at the company founder who tricked JPMorgan, one of the world's most well known financial institutions, out of a whopping $175 million.

How did she do it? By faking four million customers.

Most notably, the online platform offered users a tool to speed up completion of the Free Application for Federal Student Aid (FAFSA), which is normally a time-consuming task required of students seeking grants and loans.

Her venture proved to be a success, garnering tens of thousands of users and earning Javice a spot in Forbes' 30-under-30 list in 2019.

Despite a solid business idea and a bright-looking future ahead, Javice decided to blow the whole thing up.

In a legal complaint made against the Ivy League graduate - which should give you an indication of where this story ends up - JPMorgan's team writes: "To cash in, Javice decided to lie."

She lied about Frank's success, the depth of the company's market penetration and, most significantly, the size of its customer pool.

You see, when Javice approached the bank in 2021, she appeared to have the key to exactly what it was they were looking for at that time: student data.

The aim was for the firm to grow in this area, finding students to offer its products to and potentially secure as lifelong customers.

So you can imagine how excited the team was when Javice approached them claiming to have a whopping 4.25 million Frank users, including their first and surnames, email addresses and phone numbers.

In reality? She had fewer than 300,000 customer accounts.

During a meeting about the collaboration, Javice presented to the JPMorgan reps a spreadsheet of 4.265 million students who had supposedly started a FAFSA form with Frank.

She also shared a separate sheet claiming that more than 34 million people visited Frank's website in 2020 alone.

JPMorgan wanted to make sure the deal was worth going through with, and so, as part of its due diligence, asked Javice for a range of information including a list of Frank’s customer accounts that included important data.

But as noted in the legal complaint: "At the time of JPMC’s request, Frank was almost four million customer accounts short of its representations to JPMC.

"Rather than reveal the truth, Javice first pushed back on JPMC’s request, arguing that she could not share her customer list due to privacy concerns.

"After JPMC insisted, Javice chose to invent several million Frank customer accounts out of whole cloth."

She and her chief growth officer Olivier Amar started their scheme by first asking Frank's director of engineering to create fake customer details using 'synthetic data' - in other words, fake info generated by computer algorithms.

The engineer turned down the task, expressing concerns about the fact that it would have been illegal.

Instead of coming clean, they turned to a data science professor at a New York City area college with the same request.

Although he set to work making the list, they experienced a few *ahem* bumps in the road, as evidenced by email exchanges between him and Javice.

At one point, the professor pointed out that the list had many customers living, attending high school, and attending college in the same town and state, which he said would 'look fishy'.

There were a number of issues relating to the email addresses, too, as well as phone number duplicates.

And while all of this was going on, Amar separately contacted ASL Marketing, a marketing company that claims to have comprehensive data of high school and college students.

We're not sure whether this was down to miscommunication or just sheer panic, but on the same day Javice submitted the fake customer list to the third party vendor for validation, Amar used Frank's money to buy a list of 4.5 million students from ASL for a sizeable $105,000.

And this is where things get real messy.

Fast forward to January 2022, and the bank's marketing team wanted to test out some of the student info they'd acquired.

Frank's team sent over a final list of 4.265 million phoney customers bought from ASL and Enformion.

"Unsurprisingly, the results of the marketing test campaign were disastrous," adds the complaint.

"Specifically, JPMC sent marketing test emails to what it believed were 400,000 unique Frank customers.

"Of the individuals contacted, only 28 percent of emails were delivered, compared to a 99 percent delivery rate JPMC usually sees with similar campaigns.

"Just 1.1 percent of the delivered emails were opened, compared to 30 percent for a typical JPMC campaign."

She and Amar now being sued by the bank, with the document stating: "Javice and Amar’s fraud materially damaged JPMC in an amount to be proven at trial, but not less than $175 million."

Javice has since countersued, arguing that JPMorgan owes her legal fees that built up due to an internal investigation last year.

Although we're yet to discover the outcome of this legal battle, one thing's for sure - 'fake it till you make it' is not always the best course of action.