My favorite thing about this case is how she bragged to her lead engineer she wouldn't go to prison, "“Don’t worry — I don’t want to end up in an orange jumpsuit" when she was trying to convince the engineer to fabricate their user data.
From the complaint:
> In particular, CC-1 and JAVICE asked Engineer-1 to supplement a list of Frank’s website visitors with additional data fields containing synthetic data.
> Engineer-1 was uncomfortable with the request and stated, in sum and substance,
“I don’t want to do anything illegal.” JAVICE and CC-1 claimed to Engineer-1 that it was legal. JAVICE stated to Engineer-1, in sum and substance, “We don’t want to end up in orange jumpsuits.” Engineer-1 declined the request from JAVICE and CC-1.
> shortly after Engineer-1 had declined the request to create a synthetic
data set—CHARLIE JAVICE, the defendant, contacted Scientist-1 and asked him to create the synthetic data set. In JAVICE’s communications with Scientist-1, she falsely represented that the data she provided to Scientist-1 was a random sample of a much larger database of Frank users.
> Also on or about August 3, 2021, JAVICE forwarded to Scientist-1 the Access Link
Email sent to her by Engineer-1. JAVICE wrote, “here is the link. will share credentials offline.” Based on Scientist-1’s communications with JAVICE, Scientist-1 understood that the data available via the Access Link Email—a data set of approximately 142,000 people—was a random sample of a larger database which contained data for approximately 4 million people.
On top of everything else, Scientist-1 doesn't come off looking too good.
He was contracted to make a synthetic dataset, based on a small set of records which were supposedly randomly sampled from a larger original dataset. He didn't really have any way of knowing he was being lied to at that point, or what his work would be used for.
But when he invoiced $13k for his services, including a detailed breakdown of what he did, Javice came back and offered him an extra $5k if he would change the invoice to a one-liner that just said "data analysis services". And he immediately agreed.
I find it hard to believe someone could get that request and not understand that they were being asked to be complicit in fraud. At best, it's really poor judgment.
Hindsight bias, and you're wrong by saying that the $5k were conditional on the line item change (they weren't). Here's the quote from the indictment:
> JAVICE responded to Scientist-1 that same day, “Can you send the invoice back at $18k and just one line item for data analysis?”
>
> Scientist-1 replied, “Wow. Thank you. Here is the new invoice.” Attached to this email was a new invoice, now for $18,000, with the previous specific descriptions removed and replaced by the one-line description, “Data science services”
It is very common for large companies to ask for changes to line items as it helps the finance team categorize. Also, it's clear from this conversation that the scientist believed the $5k to be a generous tip.
Even if all of that weren't the case, this should be a case of innocence until proven guilty; it's easy to see the crime in hindsight, but if you suspect nothing that thought might just not cross your mind in the first place.
You can call it hindsight bias if you want. What you seem to be saying is that your heuristics would have told you that Javice had no nefarious intent based on that exchange, and you would of course have been wrong. My heuristics are very different.
It is very obvious to me that the extra $5k was "conditional" because if Scientist-1 hadn't sent back an invoice for $18,000, he wouldn't have gotten paid $18,000.
I have never heard of a company giving a 40% "tip" after the fact to a contractor who was already billing $600/hour. It seems like Scientist-1 did not question this tip because it didn't benefit him to do so. He didn't suspect anything because he was motivated against suspicion. That's a lack of integrity.
I've done consulting work a bit like this. Being asked to change the invoice: consolidate lines and change the description, is very common. If I were asked to do that I'd just do it, without questioning the reason. Being asked to do that in exchange for extra money is...very odd. Like she did something completely unnecessary that signals wrongdoing. Was she trying to get caught?
I am sure if she could pull the wool of JP Morgan's eyes, she could convince Scientist-1 that it was legit. "I want to expense it under Marketing not R&D, which would let us pay you more. My CPA's eyes glaze over, can you uplevel it?" or something
You could imagine something like that happening, but from the email conversation quoted in the indictment, it doesn't seem like there was even a token attempt at justifying it.
To complement this, once when I was earning some money to type documents through computer and print them for many purposes (rent contracts, college homework and others), a woman asked me to fake their printed pregnant exam which was saying that her wasn't pregnant, I rejected, she insisted to print a simple "Yes" and I persisted without a sweat! I was young at the time about 14 years old.
try to search for samples of lab results (OCR dev, long story)... don't include anything about pregnancy or any keyword even close to it. and you will be shocked how the entire first page will be services selling positive pregnancy tests. I had no idea there was a market for that.
> she bragged to her lead engineer she wouldn't go to prison
So... obviously she was wrong. But the line between "just cutting a few corners" and prosecutable criminality isn't nearly as bright as we in the peanut gallery like to think. Lots of very successful startup launches (Uber and AirBnB are famous examples) were kinda/sorta/prettymuch illegal by the plain language of the laws they were (not) operating under. And they got stinking rich! PG himself has an example in one of the very early essays about how Viaweb kinda just skipped most of the early bureaucracy and accounting they were supposed to have been doing, figuring it would all just work out. And it did.
Kids see those examples and figure that a little cheating here or there probably isn't going to send them to jail. And it usually doesn't. Except when it does. And the distinction, for a lot of people in this community and right here on this forum, is very much a "There but for the grace of God go I" phenomenon.
Startup culture tells you to cheat, basically. Knowing how not to cheat isn't in the instruction manual.
> But the line between "just cutting a few corners" and prosecutable criminality isn't nearly as bright as we in the peanut gallery like to think
The line maybe isn't bright, but faking data to a potential buyer to make it appear like you have 15x your actual number of users is clearly way past the line you cannot see.
That would be like saying it's hard to know if noon is during the day or night because the exact moment that qualify as "dawn" is hard to discern.
I think the difference is PG faked it until he could make it work at some future endpoint, Charlie Javice gave up on trying to make it work and instead faked it at the endpoint
But my point upthread is that that "difference" is a post hoc rationalization. She needed to close that deal to save the company, in which she presumably believed. The money would change everything, right? She probably did picture this as "faking until they made it".
PG "got caught" at a moment when Yahoo (the acquirer, I think?) had already decided on a deal it valued and was willing to deal with some accounting mess to close it. Javice got caught by an investment bank with rather different ideas about value who perceived the "accounting mess" as active fraud.
In a culture (this culture!) where everyone cheats, the actors lose sight of how to judge what cheating is acceptable.
> But the line between "just cutting a few corners" and prosecutable criminality isn't nearly as bright as we in the peanut gallery like to think. Lots of very successful startup launches (Uber and AirBnB are famous examples) were kinda/sorta/prettymuch illegal by the plain language of the laws they were (not) operating under.
Not prosecuted, and not prosecutable, are two different things.
> And they got stinking rich!
Which in no way validates their actions, ethically nor legally.
The takeaway here is that you can defraud people and you can defraud the state, and will likely get away with it with a slap on the wrist (unless you steal a crazy big amount like FTX did). If you defraud rich and powerful investors, well that's a different story.
I guess it all depends on how you're cheating. Are you defrauding others in your cheating? Or are you just bypassing bureaucracy like not having a Taxi service license?
Potato/potatoe. Existing taxi medallion holders were absolutely harmed by Uber. Existing licensed hotel operators were absolutely harmed by AirBnB. And we all celebrated that to great effect here. But it was breaking the rules. We just think THOSE rules were bad but THESE rules are good.
Well, it's not our call to make, it's the prosecutors'. And you (yes, you personally) aren't nearly as insulated from this kind of risk as you think.
> Existing taxi medallion holders were absolutely harmed by Uber. Existing licensed hotel operators were absolutely harmed by AirBnB.
Then they should have sued and sought a judgment if they had a claim.
This is the NIMBY argument in a different market: Can't let anyone else build anything because it might reduce the value of what I have, thereby harming me.
It's not the same as materially misrepresenting a financial investment.
No, your logic doesn't hold. The distinction being drawn here is between civil and criminal liability. Operating an unlicensed taxi service in most municipalities (maybe all of them) is a civil infraction, not a crime.
The founder in the linked article thought that she was on the right side of the line. She wasn't. You personally might think you're too smart to[1] fall afoul of this kind of thing and that all your cheating[2] will be non-prosecutable.
But quite frankly most "criminally liable" misrepresentations to investors aren't prosecuted (basically none of them are), so the fact that this one was is more a statement about the influence of JP Morgan and the mind of this one prosecutor. And blanket statements that absolutely none of Uber's shenanigans were prosecutable seem laughable. Crimes abound.
The point wasn't to nitpick about crimes and penalties. It was that this crime happened in the context of a culture that structurally encouraged it, and we would all do well to recognize that instead of nitpicking fake reasons why it would never happen to us.
[1] The ironic analogy to hubris in security analysis isn't lost on me
[2] Because again in this world All Founders Cheat a Little Bit. We all know it.
> We just think THOSE rules were bad but THESE rules are good
That's kind of how society evolves isn't it? Rules are always changing and that's generally a good thing. Some rules are pretty set in stone throughout history - eg. murder and fraud are generally bad. Other rules around free speech, slavery, energy usage/production, social safety nets, etc., have changed for the better.
You could argue that Uber and Airbnb are worse but I think the fact that they've stuck around despite allegedly breaking rules means that most people prefer the new state of affairs that they resulted in. If something else comes up that breaks rules set by Uber and results in something better (eg. autonomous vehicles?) then I'm sure people will gravitate to that new thing as well.
What was the fraud? Limo services were always allowed in NYC, and didn't have to abide by the medallion system. All Uber did was make it more efficient to find and book a Limo.
Material misrepresentation of a business is blatant financial fraud.
If you sell someone a yellow-painted piece of metal but you tell them it's solid gold, you're not bending the rules a little bit. You're just defrauding them.
> But the line between "just cutting a few corners" and prosecutable criminality isn't nearly as bright as we in the peanut gallery like to think. Lots of very successful startup launches (Uber and AirBnB are famous examples) were kinda/sorta/prettymuch illegal by the plain language of the laws they were (not) operating under. And they got stinking rich!
I, for one, would hope "don't commit crimes!" is taught in business school ethics. (LMAO as if an MBA has ethics)
This is why, as an engineer, it seems futile to make an ethical stand against something. They'll just find someone else to do it. Early in my career I was asked to write code to cheat a benchmark, essentially to make it seem our software performed better than it really did. I agonized over it because I was a junior developer just starting out my career, and eventually got the courage to tell my manager I wouldn't do it. He said, that's OK and then assigned it to Bob, three cubicles down who didn't have any problem with it and finished the cheat in a few days.
Gaming a benchmark seems pretty small beer to be honest. Usually such things are presented with small print that tips off the customer, who will do their own benchmarks if they are not dumb.
Perhaps better to draw the line at things that are potentially illegal or break some obvious fiduciary duty.
Nice. Find accomplices by leveraging the power gradient of employment. Giving them legal advice to boot. Think that should add more time. It's an evil thing to do.
From the complaint:
> In particular, CC-1 and JAVICE asked Engineer-1 to supplement a list of Frank’s website visitors with additional data fields containing synthetic data.
> Engineer-1 was uncomfortable with the request and stated, in sum and substance, “I don’t want to do anything illegal.” JAVICE and CC-1 claimed to Engineer-1 that it was legal. JAVICE stated to Engineer-1, in sum and substance, “We don’t want to end up in orange jumpsuits.” Engineer-1 declined the request from JAVICE and CC-1.
> shortly after Engineer-1 had declined the request to create a synthetic data set—CHARLIE JAVICE, the defendant, contacted Scientist-1 and asked him to create the synthetic data set. In JAVICE’s communications with Scientist-1, she falsely represented that the data she provided to Scientist-1 was a random sample of a much larger database of Frank users.
> Also on or about August 3, 2021, JAVICE forwarded to Scientist-1 the Access Link Email sent to her by Engineer-1. JAVICE wrote, “here is the link. will share credentials offline.” Based on Scientist-1’s communications with JAVICE, Scientist-1 understood that the data available via the Access Link Email—a data set of approximately 142,000 people—was a random sample of a larger database which contained data for approximately 4 million people.
source: https://www.justice.gov/usao-sdny/press-release/file/1577861...