A fintech startup bought by JP Morgan Chase for millions may have been built on a bed of lies, according to a new lawsuit filed by JP Morgan. And if the investment bank is to be believed, it all went wrong with an $18,000 check to a New York City-area data science professor.
On Dec. 22, JP Morgan filed a lawsuit against Charlie Javice, the millennial founder of student aid facilitating platform Frank, and the company’s chief growth officer Olivier Amar, claiming the pair fabricated around 4 million nonexistent accounts that they said used their service, which JP Morgan purchased for $175 million in Sep. 2021.
The investment bank shut down Frank on Thursday, weeks after the suit was first filed. The bank maintains in its lawsuit that while it had been expecting to purchase a business “deeply engaged with the college-aged market segment” with over 4 million users, what it actually received was a customer list containing “no more than 300,000” accounts.
Alex Spiro, Javice’s legal representation, did not reply to Fortune’s request for comment, but has denied the allegations against her to other news outlets. Javice sued JP Morgan in December alleging the bank used an investigation into Frank as an excuse to fire her from her job with the company, Bloomberg reported. Spiro told the outlet that the bank’s lawsuit was “nothing but a cover.” Fortune was not able to reach representation for Amar.
JP Morgan is alleging that in 2021, when the bank and Javice first discussed an acquisition, Frank was “almost 4 million customer accounts short of its representations” to the bank. To make up for the deficit before presenting Frank’s official customer account data to JP Morgan for due diligence, the bank claims that Javice and Amar turned first to the platform’s unnamed director of engineering to create “synthetic data”—fake customer information generated by computer algorithms.
According to JP Morgan’s lawsuit, the engineer felt uncomfortable, asking “whether the request was legal” and eventually declined, so Javice and Amar allegedly resorted to an external source, referred to merely as a “data science professor at a New York City area college” in the lawsuit.
The professor allegedly agreed, according to the suit, and was willing to provide “creative solutions” to Javice and Amar’s data problems. What ensued, according to the lawsuit, was an extraordinary
