they want your information this is a big problem they ask them to lie my heart my heart would explode scammers are really interesting people they come in all shapes and forms you feel like you're gonna know what a scammer looks like and I mean they can just really come out of the woodwork I want to ask you guys would you guys think that this woman was a scammer getting financial aid might seem really really complicated but at Frank we've really simplified it for you [Music] 26 year old frank CEO Charlie is the application for free federal student aid and Charlie Chaplin she wants to help you get your student aid right real nice girl for up to thirty thousand dollars of Aid so the first step we always recommend is filing your FAFSA to be able to file your FAFSA you need to have your tax returns you need to know what's currently in your bank account and you need to know what schools you're thinking of applying to to be able to send that information to your school so that they somebody said their nose type B so Charlie is a young entrepreneur I mean God they are everywhere Tech startup culture everybody on Twitter's got a company but Charlie she was really really going for it she had her financial degree I think she had a degree in financial science she had traveled the world she had gotten more certifications on finances in Argentina and eventually she even became a leader for a Pennsylvania University on the global youth program the term startup usually refers to a business that is newly created and in a phase of early development and market research while startup was first most widely used in reference to touch is she reading something wow companies and organizations supposed to be on the board why does she look like a student so Charles Charlie she just kind of started off as I don't know just your average kind of tech person until until the day that Charlie Javis sold her company Frank to JP Morgan 475 million dollars here's the day after she sold it so it's funny because when I told my mom the news she said of course JP Morgan bought Frank you said you would you know they would be your number one when you started the company um and what you know really attracted me honestly I really want to point this out so this is what's on Yahoo finance Student Financial education platform serves more than 5.3 million students reaches students at over 6K education institutions once again serves more than 5.3 million students I started this company in one of my favorite parts of the job is working with amazing people from all different backgrounds and what was truly amazing was the leadership to daily managers everyone just had such different perspectives you know I probably met one or two men in the process the bank is run by two really fantastic women leadership like what does that mean Jeff is just so inspiring so that really was what what drove me to make that decision and you know from a secondary perspective um I believe Chase is at least the the largest bank in the U.S serving over 60 million um customers here she is Charlie Javis brimming with happiness wouldn't you be too after 175 million dollars just flowing into your account after one of the largest banks in the world buys your business well it all came crashing down when JP Morgan filed a lawsuit this past month accusing Charlie of fraud now I need you guys to take a walk with me through the complaint because this thing reads like a novel when they have to describe what happened in this case it just flows so perfectly I'm not going to tell you what happens I'm gonna let the complaint tell you so crap in we're going to be reading a little bit here dude I could not get through this without giggling bro now I need to say beforehand crime is bad scamming people is bad but JP Morgan is Big mad and I find this to be funny I just do so this is the plaintiff JP Morgan suing Charlie Jazz with this complaint defendant Charlie Javis founded a small startup business known as Frank that seemingly had the potential to grow and become a successful Enterprise in the future and appeared to have early proven success but to cash in Javis decided to lie including lying about Frank's success Frank's size and the depth of Frank's Market penetration in order to induce JP Morgan to purchase Frank for 175 million specifically Javis represented in documents placed in the acquisition data room in Pitch materials and through verbal presentations that more than 4.25 million students had created Frank accounts to begin applying for federal student aid using Frank's application tool then when JP Morgan specifically requested proof of the claim during due diligence Javis used synthetic data techniques to create a list of 4.2 million fake customers a list of names addresses dates of birth and other personal information for 426 million students but it's a dangerous game you're playing Frank so basically when a company is planning to acquire another company due diligence is the practice where they need to go through the books and make sure everything is accurate okay so an example of this is I used to work at another company that was trying to sell it was like a YouTube entertainment company and they were trying to sell to a bunch of bigger companies right and so when these bigger companies went in to do their due diligence they're combing through the numbers and these numbers just don't add up the profits aren't real so they backed out of the deal well in this situation when JP Morgan said that they wanted to do their due diligence on Charlie's program Frank Charlie produced a list of 4 million fake users and gave it to JP Morgan and said oh these are all the customers I told you this literally reads like a freaking novel dude like the way they wrote it out it's not like a whole bunch of legal jargon it's just like it's what happened in 2017 Javis started Frank a for-profit company that aimed to help students navigate The College financial aid process Frank offered students a tool to expedite completion of the free application for student aid the FAFSA tool I kind of get what she was trying to do because when I was going to Community College I I don't want to fill out all those damn forms listen especially in 2023 if I could just get a little app and click click click click click here's your money that would be great Frank also provided students with information on scholarships financial aid appeals and college courses to tout Frank's success job is publicly claimed that Frank had helped millions of students obtain billions of dollars in student aid by early 2021. and keep in mind this is just within four years she's claiming that they had helped billions since 2021. Jarvis approached JP Morgan in the summer of 2021 after reviewing so this deal closed and they discovered it as fraudulent in just six months she was trying to close fast Javis approached JP Morgan in the summer of 2021 after reviewing the opportunity JP Morgan agreed to explore a potential acquisition at an initial July 2021 meeting Javis told JP that Frank had significant engagement with college-age students a market segment that JP Morgan wanted to grow let me explain something else here so this company had helped these college students get billions of dollars in student loans well there is some money to be made for JP Morgan maybe the app costs five dollars a month uh maybe they take a cut of something but what they really really want is access to that customer data if you guys didn't know a lot of times when you sign up for a website and you you know you say yes all those terms and conditions and you put your email address in there you're you're signing up to their data pool right so if JP Morgan has primarily a demographic of older people that use their Banks you know 40 56 years old now they want to to start to acquire the 18 to 24 year old demographic they want to buy companies that have those data lists in Mass so a College financial aid company is perfect for them to acquire that target audience college students with no credit history and financial issues that is exactly who JP Morgan wanted so this is a massive investment for them and if the user list is fake this is a big problem but they don't know this yet Javis stated that Frank had 4.25 million users expressively defining a user as an individual who created a Frank account by entering a first name last name email and phone number on Frank's website she distinguished users from website visitors representing to JP Morgan's diligence team that since 2017 Frank had more than 35 million visitors to the website so they don't really care about the website traffic they said oh my God you have over 5 million people that have put put in their full name email address and phone number and they've consented to giving you their data we want that the materials Javis posted in the acquisition data room repeated javas's representations she included in the data room a spreadsheet with a column labeled FAFSA in progress showing that 4.2 million students had started a FAFSA form with Frank which required creating a Frank account with more than 2.1 million students fully completing the FAFSA through Frank Javis posted a different spreadsheet showing more than 34 million visitors to Frank's website through 2020 alone so she's saying that this is a huge company and they've done all of this in just four years you guys see how this is like to JP Morgan they got to get in on this right and honestly it's a JPMorgan 175 million dollars it's really not that much money to the way they found out is so funny okay based on the July 21 meeting and data room materials JP Morgan confirmed Frank's definition of a customer base namely customers are users who created a Frank account therefore after the due diligence on their 4 million customer account claim JP Morgan made an unambiguous request to Javis for a list of Frank's customer accounts that included important data such as first names last names date of birth phone number blah blah blah they asked Javis these key questions in writing how many customer accounts have 100 of the below data remember they're buying data how many customer accounts have partial information and of partial records what percent is included in each data field below God do you guys see this I'm literally just buying data and they want your information so these data lists they're they're like massive Excel spreadsheets with you know your name phone number sometimes they might even have a field at the end with your common interest like when you're on Instagram it's collecting you like cars you like coffee you like YouTube you know stuff like that so this data list at the end might have you your name your email address your social media handles and then a little list of things that you like right well when a marketer goes to run an Instagram ad or a tick tock ad or a Facebook ad they can buy these massive dative lists by the hundreds of thousands to the millions and then when they go to upload their ad they can just drag that list and click and throw it in there and now they're marketing to you so they've bought your data from another website whether it's defunct whether it's active whether they've whatever and that's how they Market to you this is how they make even more money This Is How They simplify their targeted audiences JPMorgan believed that this diligence on current customers would confirm their investment thesis specifically they sought to confirm its thesis that Frank's acquisition of 4 million customer accounts demonstrated that Frank had created momentum growth and scale by developing meaningful relationships with millions of students that momentum growth and scale of JPMorgan believes indicated that Frank was a proven acquisition machine for college age students and would continue and even increase its customer account base once rank merged into JPMorgan okay this is what happened this is the kicker JP's diligence request was problematic for Javis and Frank Frank did not have 4.2 million customer Accounts at the time of jpmorgan's request Frank was almost 4 million customer accounts short of its representation to JP Morgan so in reality she had about 200 000 customers rather than reveal its truth jab is first pushed back on JP's request arguing that she could not share her customer list due to privacy concerns you haven't bought the company yet so I can't show you after GP insisted Javis chose to invent several million Frank customer accounts out of whole club Javis along with her cheap growth growth officer Olivier Amar first asked Frank's director of engineering to create fake customer details using synthetic data techniques they asked them to lie okay in plain English synthetic data is fake information typically created by computer algorithm so they went into chat GPT and they said chat GPT create four million fake accounts in an Excel spreadsheet not comfortable the engineer asked Javis and Amar whether the request was legal a good man in response javish sought to assure the engineer that she was not requesting that the engineer engage in illegal conduct the Frank engineer was not persuaded and declined to participate in the scheme and instead said that he would only provide Javis wooden Frank with an actual list of customer accounts fewer than 300 000 customer accounts oh my God is he snitching Javis then turned to a data science professor at the New York area College who advertised his oh Creative Solutions to data problems Javis provided the data science Professor a list of 293 000 individuals who had started or submitted a fafsa's application through Frank she then directed the data science Professor to use synthetic data techniques to create 4.2 million customer names email addresses birthdays and other personal information on the list that Java supplied emails between Javis and the data science Professor make clear that the customer list consisted of fake data for example the data science Professor wrote Javas to confirm that for names our plan was to sample first name and last name independently that ensure none of the sampled names are real regarding creating physical addresses the data science Professor wrote to jabus I can't seem to find addresses in my raw files should I attempt to fabricate them Javas responded I just wouldn't want the street to not exist in the state later the data science Professor determined that real addresses may not be doable and Javis responded if we can't do real addresses what's the best we can do for that dude this lady was scheming she said I got JP Morgan on the line and we're gonna Hook Line and sink the data guy emails Charlie and he's like hey um I gotta make sure that none of the names are real so they've got to be like really crazy names like otherwise this is really messed up and so she's like okay cool and then the data science guy is like okay wait now I need to create physical addresses for this um I don't have any like fake addresses in my data files should I just make this up and Charlie's like well we need to make sure that the street is real and the street exists in that state like she knew exactly what she was doing when reviewing the fake data the data science Professor noted that many entries confusingly had customers living attending high school and attending college in the same town and state and concluded that the list would look fishy if he were to audit it Javis was particularly concerned with the email addresses asking the data science Professor will the fake emails look real with an eye check or better to use unique ID he responded they will look fake at which point Jarvis agreed to use a unique ID as well so they were going to use an AI to generate all of these email addresses so they would have looked like Cordon Bleu one two three a689 at AOL.com like it would have just been a whole bunch of weird-ass emails like that or like letters and numbers and letters and numbers so they used something instead called unique ID which would be like harder to detect that one in the chat if you can look at an email address that looks insane and decide oh that's probably fake when the data science Professor struggled to add certain College names to the list Javis indicated that the perfect solution was to draw a school at random in the same state as the college that could not be added so she's scheming with this person to create this fake list they have the emails back and forth where she's telling the dude how to do it when the data science Professor informed Javas of the data she provided contained the same phone number appearing for six 76 individuals Travis instructed him to double check the duplication rate isn't more than five to seven percent for the synthetic data so basically in the customer list there was a couple people there were a couple people like hundreds of people that would have the same phone number right so she told him to go in and do a thorough check to make sure the duplication rate was only five to seven percent so that out of you know four million people when you're scrolling through the naked eye you're not going to notice that those numbers are a duplicate but it's kind of hard for the AI to just make up a whole bunch of numbers and Not Duplicate them at the very end of this ultimately the data science Professor created a list of 4.2 million fake accounts the fake customer list as Javis had requested and submitted it to a third party vendor for validation as Javas directed at the same time Javis was working with the data science Professor on the fake customer list Amar separately reached out to the ASL marketing a marketing firm the purports to have the most comprehensive and accurate responsive data of high school students college students and young adults available anywhere Amar caused Frank to purchase a list of 4.5 million students from the ASL for a cost of a hundred and five thousand dollars on the same day that Javis transferred the fake customer list to the third party well the ASL list arrived too late for Jarvis the data science Professor to use it in creating the fake customer list because JB Morgan was put on that pressure Travis and Amar later decided to use the ASL list to further deceive JP Morgan and cover their tracks after the Frank acquisition closed again providing JPMorgan data for Frank customers that did not exist so another little background information I used to work for a small company I didn't work there for very long um but I was in marketing there and the company needed money and they needed money fast and one way that they would make money was by selling their giant data list to random companies and then another way that they would sell their products was by going to this I don't know this big website online and then buying data lists of like attorneys to like send these mass emails to random attorneys so basically what ammar did was they bought one of those random massive lists of students for a hundred and five thousand dollars oh my god dude you can depending on what the niche is you can buy like a hundred thousand names no you can buy like 50 000 names for like I don't know eight grand so if they bought a list of a hundred and five thousand it was probably like five million people the cover-up of Frank's fake customer data began immediately after the third party vendor completed its validation process within four minutes of receiving the analysis Javis directed the vendor to destroy the fake customer list and not share additional backgrounds JP Morgan this is after they completed the validation process so I guess the money hasn't happened yet next the data scientists sent Javis an invoice for thirteen thousand dollars which included lines for each of the fake data fields he created Javis immediately directed the data science Professor to resend the invoice with only one generic line item for data analysis and to increase the amount of the invoice to eighteen thousand how the [ __ ] does JP P Morgan have all of this information like bro I told y'all they have the whole storyline relying on the fit customer list and representation warranties that javasana Mark caused Frank to make as part of the acquisition JP Morgan entered into the agreement and plan of a merger dated as of August 8th with Finland merger sub pursuance the merger agreement JP Morgan acquired Frank for a purchase of 175 million dollars with the merger closing on September 14 2021. all of this happened within two months soon after the third party vendor completed its validation process and Frank entered into the merger agreement Javis again engaged the data science Professor to work with another third party vendor to obtain additional email addresses to add on to the individuals to the ASL list Javis decided to purchase the additional email list because she knew JP always intended to Market its products and services to both Frank's existing users and the student accounts Frank would acquire in the future and therefore at some point closing JP Morgan would ask for the Frank customer data file Charlie had a data person make fake data because there was a deadline to get these names over to JP Morgan and then on the back end her partner was buying a real list of email addresses of students okay and so they sent over the first list just to get them through that that time limit and then they plan afterwards to send the real list of email addresses in January 2022 to test the quality of Frank's customers list and the receptiveness of these customers to JP Morgan's products and services JP requested that Frank send Frank's list of 4 million customers to the Morgan marketing team Javis MMR however knew that that list did not exist so Javis and Amara first provided the marketing team with a list of individuals sourced from the ASL so these are real email addresses said differently the email addresses that javison Omar sent to the marketing team which Javis and Amar knew that they planned to use to conduct a marketing campaign were derived from the data purchased from the ASL and infermion so they actually sent real email addresses unsurprisingly the results of the marketing tests were disastrous specifically JP Morgan sent marketing test emails to what they believed were 400 000 unique Frank customers of the individuals contacted only 28 of the emails were delivered compared to a 99 delivery rate JPMorgan usually sees with similar campaigns just one percent of the delivered emails were open compared to a typical for JPMorgan campaign after the unusually poor returns from the marketing campaign they reviewed the various aspects of Frank's business when you guys open up those emails from Sephora or Amazon in your in your email address on the back end the marketers can see how many emails got sent out how many bounced how many were opened and how many were unread they can just see it as a percentage so basically normally JP Morgan sees 30 percent of their emails get opened which is pretty good but of this list only one percent opened that's insane as a result of its review JP discovered the fake customer list and the ASL JP compared those lists to Frank's actual customer lists and examine emails messages and chats among Javis the data science professor and Amar those documents leave no doubt that the fake customer list and the ASL list did not contain the first name last name address and phone numbers for actual Frank customers Frank's files and datas do not include any list or database of the foreign to start a FAFSA that list does not exist in every aspect of your interactions with JP Morgan Javis had a choice between one revealing the truth about her startup and accepting Frank's actual value two lying to inflate Frank's value in reaping the rewards from that inflation Javis chose each time to lie and the evidence shows that time and time again she layered fraud upon fraud to deceive JP Morgan dude I would not be able to keep him alive for this long my heart would explode my mind dude can we applaud her audacity now dude the audacity this girl really complicated but at Frank we've really simplified it for this girl dude she went for the gold Javis and amarg used the fake customer list and other knowingly false merger agreement representations to fraudulently induce JP Morgan to enter the merger JP paid 175 million for what it believed was a business deeply engaged with the college age Market segment with 4.2 million customers instead it received a business with fewer than 300 000 javison of Mars fraud materially damaged JP Morgan in an amount to be proven at trial but not less than 175 million dollars so what they mean by that is not just 170 million dollars in what they paid for the acquisition but also the time invested how much they paid these third-party vendors just just everything written business school as the voice of a microfinance generation in the past week All That Came Crashing Down barely a year after selling Frank to JP Morgan for 175 million the bank accused the 30 year old of fabricating almost 4 million names do you guys think Morgan's gonna get any of their money back it's Ernie so so I'm just like that she probably was writing the attorney like make sure they can't go back let's let's make this airtight Charlie you did it you know she she flying off somewhere after this I don't know where she's going probably somewhere with Sam bankman dude