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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 series of email exchanges.
The data science professor was tasked with creating data for nearly 4.3 million customers for Frank, including names, emails, and birthdays, according to JP Morgan’s lawsuit, and it was allegedly made clear from the onset that the professor and Javice were both fully aware that the information would be fictitious.
When crafting the new customers’ names, the professor allegedly emailed Javice with a proposed model to weed out real people’s names by testing first and last names independently, to “ensure none of the sampled names are real.”
In another email, the professor allegedly noted how many of the accounts’ personal information histories were the same, including an unnatural rate of recurrence for high school names and hometowns. Such a list “would look fishy to [him] if [he] were to audit it,” the professor wrote. When it came to creating phone numbers, Javice allegedly told the professor some duplicated numbers among the accounts was acceptable, as long as no more “than 5%-7%” were copies, 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 at one point allegedly telling Javice they were “wasting too much time on the address thing.” Early on in the process, the professor allegedly told Javice he was having trouble finding believable addresses. “Should I attempt to fabricate them?” he asked, to which Javice answered: “I just wouldn’t want the street to not exist in the state.”
For his troubles, the data science professor sent Javice a $13,300 invoice, according to JP Morgan’s lawsuit. But the summary of his work allegedly proved problematic, as the professor had allegedly written down individual line items of each fake information field he had helped create. Javice “immediately” asked the professor to redo the invoice with a single line reading “data analysis,” promising him a bigger bonus and increasing the invoice to $18,000, according to the lawsuit, and the professor then allegedly complied with the request.
Pablo Rodriguez, a JP Morgan spokesperson, told Fortune that the disputes between the bank and Javice are set to be ironed out in court.
“Our legal claims against Ms. Javice and Mr. Amar are set out in our complaint, along with the key facts. Any dispute will be resolved through the legal process,” he said.
This story was originally featured on Fortune.com
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