Thread by @sytaylor

A founder sold her startup to JPMorgan for $175M.

The bank thought they were getting 4 million customers.

They actually got 300,000.

Now she's going to prison.

The Charlie Javice story is a masterclass in how NOT to exit your startup...

Charlie Javice founded Frank, a financial aid platform for students. By 2021, she'd raised over $20M from notable investors.

She'd even been featured in Forbes 30 Under 30.

JPMorgan saw a golden opportunity: acquire Frank and sell banking products to millions of students.

But there was one problem...

Frank didn't have millions of users. Not even close.
When JPMorgan asked for customer data during due diligence, Javice faced a choice:

- Walk away from $175M
- Create fake customers

She chose option B.

First, Javice approached Frank's head of engineering to create synthetic data for 4M customers.

He refused.

So she hired a math professor for $18,000 to generate 4 million fake customer profiles instead.

The math professor created a data file of 4M non-existent people.

This file was given to a third-party verification firm that simply counted the rows and confirmed: "Yep, looks like 4M customers!"

JPMorgan's team bought it.

Literally.

JPMorgan wired $175 million, and the deal closed.

Then came time for JPMorgan to actually market to these supposed millions of customers...

When they sent out emails, only 28% were even deliverable.

The fraud unraveled spectacularly.

The prosecution's case was damning:

- Evidence of payments to create fake data
- Clear intent to deceive
- A paper trail showing Javice knew exactly what she was doing

Last week, a jury took just hours to convict her on all counts.

What's shocking isn't just Javice's fraud, but how easily JPMorgan was duped.

Some JPM employees had raised red flags about the data, but deal fever won out.

The bank's due diligence process was embarrassingly shallow for a $175M acquisition.

Even more remarkable? JPMorgan never insisted on:

- Running basic email validation checks
- Sampling the customer data
- Verifying with actual users

One of America's largest banks got outmaneuvered by a 30-year-old founder.

This story resembles other tech frauds we've seen:

- Elizabeth Holmes (Theranos)
- Sam Bankman-Fried (FTX)
- Adam Neumann (WeWork)

All leveraged FOMO and surface-level credibility to bypass thorough scrutiny.

The lessons are clear:

For founders: Short-term fraud → long-term prison. No exit is worth decades behind bars.

For acquirers: Verify everything. Twice. Especially customer data, which is often the primary asset.

Javice now faces decades in prison, though she plans to appeal.

The most incredible part? She could have built a legitimate business with her talents and connections.

Instead, she chose a shortcut that led to the longest possible detour: federal prison.