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 a check for $18,000 to a New York-area data science professor.
Dec. On the 22nd, JP Morgan filed a court case Against Charlie Javice, millennial founder of student aid platform Frank, and chief business growth officer Olivier Amar, claiming the pair fabricated around 4 million non-existent accounts which they claim have used their service, which JP Morgan bought for $175 million in Sep 2021.
The investment bank to close Frank on Thursday, weeks after the complaint was filed. The bank argues in its lawsuit that while it expected to buy a company “deeply engaged with the college-age student market segment” with more than 4 million users, what it actually did received was a client list containing “no more than 300,000” accounts.
Alex Spiro, Javice’s legal representative, did not respond to Fortunebut denied the allegations made against her for other media. Javice sued JP Morgan in December, alleging the bank used an investigation of Frank as an excuse to fire her from her job at the company, Bloomberg reported. Spiro told the outlet that the bank’s lawsuit was “nothing more than a cover-up.” Fortune could not reach Amar representation.
JP Morgan alleges that in 2021, when the bank and Javice first discussed an acquisition, Frank had “nearly 4 million customer accounts short of his representations” with the bank. To bridge the gap before presenting Frank’s official client account data to JP Morgan for due diligence, the bank says Javice and Amar first turned to the platform’s anonymous engineering director to create “synthetic data” – false customer information generated by computer algorithms. . .
According to JP Morgan’s lawsuit, the engineer felt uncomfortable, asking “if the request was legal” and ultimately refused, so Javice and Amar allegedly resorted to an outside source, simply referred to as “professor of data science at a New York-area college. in the trial.
The professor reportedly agreed, according to the suit, and was willing to provide “creative solutions” to Javice and Amar’s data issues. What followed, according to the lawsuit, was an extraordinary series of email exchanges.
‘Should I try to make them?’
The data science professor was tasked with creating data for nearly 4.3 million customers for Frank, including names, emails and birthdays, according to the JP Morgan lawsuit, and it would have been clearly indicated from the start that both the Professor and Javice were fully aware that the information would be fictitious.
When creating names for new clients, the professor allegedly emailed Javice with a proposed pattern to weed out real people’s names by testing first and last names independently, to “ensure that no sampled names is real”.
In another email, the professor reportedly noted how many of the accounts’ personal information histories were the same, including an abnormal recurrence rate for high school names and hometowns. Such a list “would seem fishy to [him] if [he] had to audit it,” the professor wrote. Regarding the creation of phone numbers, Javice allegedly told the professor that some duplicate numbers among accounts were acceptable, as long as no more than “5% to 7%” were duplicates, according to the suit.
Physical addresses proved to be one of the biggest sticking points due to the complexity of creating unique addresses, according to the lawsuit, with the professor allegedly telling Javice that they were “wasting too much time with the ‘address”. Early in the process, the professor allegedly told Javice that he was having trouble finding credible addresses. “Should I try to make them? he asked, to which Javice replied, “I just wouldn’t want the street not to exist in the state.”
For his troubles, the data science professor sent Javice a bill for $13,300, according to the JP Morgan lawsuit. But summarizing his work proved problematic, as the professor allegedly wrote down individual elements of each fake information field he helped create. Javice “immediately” asked the professor to redo the bill with a single line reading “data analysis,” promising him a bigger bonus and raising the bill to $18,000, according to the lawsuit, and the professor then complied with the request. .
Pablo Rodriguez, spokesman for JP Morgan, said Fortune that the disputes between the bank and Javice should be settled in court.
Our legal claims against Ms. Javice and Mr. Amar are set out in our complaint, along with the main facts. Any disputes will be resolved through the courts,” he said.
Learn how to navigate and build trust in your business with The Trust Factor, a weekly newsletter examining what leaders need to succeed. Register here.
0 Comments