Does White Collar Crime Pay?

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Wall Street’s double standard is on full display. Chris revisits his long-standing argument that major investment houses and their executives are virtually untouchable—facing fines that amount to little more than parking tickets—while outsiders who cross them pay a steep price. Using the case of Charlie Javis, the Frank founder sentenced for defrauding JP Morgan Chase, he exposes how the rules of power, profit, and punishment work differently when you’re not part of the “Too Big to Fail” club.

Episode Transcript

Speaker 1 (00:00):
The Watchdog on Wall Street podcast explaining the news coming
out of the complex worlds of finance, economics, and politics
and the impact it we'll have on everyday Americans. Author,
investment banker, consumer advocate, analyst, and trader Chris Markowski.

Speaker 2 (00:16):
Does white collar crime Pay. Years ago I wrote a
column talking about how you know, if you work at
one of the big investment houses you can basically get
away with anything. I actually said, you know, if you
had an ethical bypass at birth, you know, and you
want to go out and rip people off and be

(00:37):
a criminal for your entire life. Smart thing to do
is study hard in school, get yourself into a top school,
in particular, probably an Ivy League school, get your job itself,
a job at a big firm, and guess what, pretty much,
do whatever you want, unless, of course, one exception, one exception.

(01:01):
Don't rip off a big firm, don't rip off the
firm you're working for. Too big to fail is omnipotent
in every way, shape matter reform. There was a story,
and I talked about this years ago. A lady by

(01:24):
the name of Charlie Javis. She was a founder of
a company called frank and the company that her startup
that she founded was acquired by JP Morgan Chase. This
is back in twenty twenty one for one hundred and
seventy five million dollars. Well, Charlie Javis was just sentenced

(01:46):
to a little over seven years in prison for defrauding
JP Morgan Chase by overstating how many customers the financial
tech company had. Now, Frank was a company that was
there to help young people, young people with their student

(02:08):
loans and getting student loans. Anyway, what she did. What
she did was she cooked the books, cooked her books
in the sense of the amount of customers that she
actually had. She told JP Morgan Chase that she had
over five million customers. It was more along the line

(02:31):
of around three hundred thousand real customers. Now, again, what
she did was wrong, Stigo. She actually had her workers
make up fake people in order to get essence, cook
her books in regards to the client tell that she
had If I kind of find this story fascinating, the

(02:53):
reason why I bring it up is I can go.
You can go. You can take a look at my archives,
my columns that I've written over the years, all the
big investment firms and all the ripoffs and scams that
they've pulled off on the American people, and find one person,
find one that's ever done any jail time what happens.

(03:18):
What happens is they pay a fine and they walk away.
It's basically a parking ticket. You're a member of Too
Big to Fail. You're part of that club. Do whatever
you want. I've often decided to remember Eric Holder, former
Attorney General new Barack Obama, was asked that questions like,
what am I gonna do? I gotta mess around with these

(03:39):
big firms. I'm paraphrasing here, it's going to hurt the economy.
I can't go ahead and do that. Wow, like I said,
omnipotent in regards to what they can get away with
and what they can do. Sure they pay a fine
to them, like I said, so kin to a parking ticket,
a cost of doing business. This story I also found

(04:02):
fascinating as well, is that well Charlie Javis. Charlie Javis
had a business that had five million Well she told
JP Morgan Chase they had five million customers. Now again,
financial tech business. Why would JP Morgan want to acquire that? Well,
you know what, got five million people? We can go

(04:24):
to and get credit cards, checking accounts, savings accounts, maybe
mortgages down the road for five million, and at a
cost of one hundred and seventy million, all they would
need to do is recoup thirty seven dollars from every
single one of those clients. Now they wouldn't get them all,
but that that's not that difficult for a JP Morgan

(04:48):
Chase quite frankly, so I kind of thought about that,
and people think, wow, one hundred and seventy five million
dollars a lot of money for a buyout. Not really,
if it's got five million loyal customers, JP Morgan was
getting a deal. In fact, I can almost guarantee that
the bankers at JP Morgan Chase were high fiving each

(05:11):
other looking at their great fortune. We just took over
a financial tech company with young people that's got five
million customers. So again, this is the world of Wall Street. Okay,
that's how it operates, one trying to get over on

(05:32):
the other. But understand, okay, never ever ever rip off
a big firm, because they will throw the book at you,
no doubt. And again I've got no pity for Charlie
Javis and what she did the one to grow on here,
right now is be careful who you're doing business with.

(05:53):
I'll understand what their underlying motivations are first and foremost,
it'll keep you out of trouble. Watch dog on Wall
street dot com