Alfonso Berumen (Pepperdine U Graziadio Business and Management) has posted “When Data Lies: Synthetic Data, AI, and the New Corporate Risk” on SSRN. Here is the abstract:
The case of Charlie Javice and the $175 million acquisition of her startup, Frank, by JPMorgan Chase (JPMorgan) provides a critical lens through which to examine the emerging corporate risks associated with synthetic data. Javice allegedly fabricated millions of student/user/customer profiles to inflate metrics, highlighting how internally generated synthetic data can be weaponized to mislead investors and bypass due diligence efforts. This white paper explores the broader implications of the Javice case, positioning it as a cautionary example of how synthetic data, while a powerful tool for innovation, machine learning, and privacy-preserving analytics, can also be exploited for fraud. As Artificial Intelligence (AI) becomes more deeply embedded across industries, this paper offers a set of regulatory, legal, and ethical recommendations aimed at addressing the dual-use nature of synthetic data and safeguarding corporate integrity.