Is fraud a gendered activity? It used to be considered somewhat masculine. But after Elizabeth Holmes (Theranos), who was recently sentenced to eleven years in prison, another young woman has proven, to anyone who may still need convincing, that women are quite capable of pulling off spectacular scams.
Many media outlets like Forbes, the New York Times, Fortune and Business Insider, have recently covered the story of a startup named Frank. Created in 2016 by celebrated Wharton alumnus Charlie Javice, it was sold in 2021 for a cool $175 million. The buyer? JP Morgan, one of the most prestigious financial institutions in the United States, which is now suing Charlie Javice. Frank was a free online service that enabled prospective students to apply for financial aid, including federal grants.
By 2021, Charlie Javice was claiming that Frank had been used by more than 4 million students in over 6,000 educational institutions. Two years later, it seems that this network had been considerably overestimated. Javice reportedly enlisted the help of a data science professor to create a fake student list!
For the most enthusiastic observers, the wonderment at this marriage of gain and benevolence can only be heightened by the addition of gender revenge.
Apart from the fact that they were led by young women, the striking similarity between the Theranos and Frank cases is their shrewd combination of the lure of profitmaking with the appeal of doing good. In addition to promising substantial economic benefits, these entrepreneurial projects added a social dimension in the form of seeking to provide the broadest possible access to two key issues: health for Theranos and education for Frank.
Once valued at nearly $10 billion, Theranos had planned to automate blood tests, thereby radically lowering their cost. Frank was presented as a provider of assistance for students seeking financial support, free of charge, unlike credit institutions. In both cases, it was a question of circumventing financial barriers: in the USA, medical examinations are extremely expensive, and so is higher education. Investors could therefore expect to make money in good conscience.
The lure of gain compounded by the appeal of doing good…
Every scam depends on simultaneously tempting and blinding the victim. First of all, the victims (in this case, the investors) must be attracted by tempting them with promises. Promising both gain and good is much better than promising only gain (profit is morally questionable), or solely the opportunity to do good (everyone wants to do good, but not beyond a certain cost).
The victims must also be blinded to the realities in order to prevent them from developing suspicions. Once again, promising both gain and good is much better than promising only gain (if the deal seems too good to be true, it may arouse suspicion), or only good (we have all encountered “feel-good” scams). The combination of gain and good produces the optimal combination of desire and gullibility.
Of course, in both cases, what makes these promises plausible are digital technologies and their tremendous potential. More precisely, it is the association of imagination with these technologies that lends them an almost limitless power. There is no limit to the technical prowess (Theranos), no limit to the networking and popularity (Frank). There is no limit to the profits that can be made. Google, Apple, Ebay, PayPal, Facebook, Amazon, etc., have generated and stimulated this imagination.
… and that of gender
However, technology alone can seem frightening if it is employed by cold, anonymous organisations, often suspected of being domineering, bureaucratic and all-pervasive… This is where the entrepreneurs who carry out these projects come in – people who are charismatic, daring, atypical, or even deviant. This component is reassuring. Atypical entrepreneurs are reassuring because they seem to have mastered the technology. They give it a human face.
For both Frank and Theranos, the entrepreneurs were women. And, yes, it does matter. After all, the world of tech and entrepreneurship is regularly denounced as being shamefully masculine and patriarchal.
For the most enthusiastic observers, the wonderment at this marriage of gain and benevolence can only be heightened by the addition of gender revenge. This adds to the appeal of the project. For the more sceptically minded, it makes it all the more difficult to raise suspicions about these successful entrepreneurs, and drowns out any warnings…
Could evil also bring about the revenge of gender?
This post gives the views of its author, not the position of ESCP Business School.
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