There’s a known phrase – “fake it till you make it”? And it looks like Charlie Javice might’ve taken that a bit too literally, and JPMorgan Chase (JPM) just learned that the hard way.
Javice, the 30-something founder of a college financial aid startup called Frank, was found guilty of fraud after convincing JPMorgan that her company had four million users when it had fewer than 300,000. Maybe it was just a typo…
Cooking the Books
According to court testimony, when her head of engineering refused to cook the books, she paid a math professor $18,000 to whip up a synthetic list of fake students. Four million imaginary users later, JPMorgan handed over $175 million to buy Frank in 2021.
What is even more incredible is that JPM didn’t catch on until after the deal, when it launched a marketing campaign and noticed that only 28% of emails went through. The other 72% must’ve bounced off the Matrix.
JPM Got Outplayed
Though Javice and her co-executive Olivier Amar now face up to 30 years behind bars, JPMorgan’s role here is far from flattering. For all its Wall Street muscle, the bank did little more than count data fields and nod along. Their due diligence team basically got outplayed by a spreadsheet and a professor with a side hustle.
The case, which ended with a guilty verdict on March 28, spotlights startup exaggeration and how billion-dollar institutions can fall for the oldest trick in the startup book: overpromise, overhype, and underdeliver. Moral of the story? Always check the receipts, especially when paying nine figures for a student app.
Is JPM a Good Stock to Buy?
On Wall Street, JPMorgan Chase is considered a Moderate Buy. Its average price target is $274.40, implying a 12.99% upside potential.
