The 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. If the investment bank is to be believed, it all went wrong with an $18,000 check to a data science professor in New York.
On Dec. 22, JP Morgan filed a lawsuit against Charlie Javits, the millennial founder of the student aid that facilitates Frank’s platform, and Olivier Amar, the company’s chief development officer, alleging the pair created nearly 4 million non-existent accounts using its services. JP Morgan bought it in September 2021 for $175 million.
The investment bank closed Frank on Thursday, weeks after the lawsuit first aired. Expecting to buy a business “deeply engaged in the college-aged market segment” with more than 4 million users, what it actually got was a customer list of “no more than 300,000” accounts, the bank says in its lawsuit.
Javice’s legal representative, Alex Spiro, did not respond Luck‘s request for comment, but denied the accusations against him to other news agencies. Javice sued JP Morgan in December after the bank used an investigation into Frank as a pretext to fire him from the company. Bloomberg reported on this. Spiro said the bank’s claim was “nothing but a cover-up.” Luck He could not reach Amar’s representation.
JP Morgan claims that when the bank and Javice first discussed the acquisition in 2021, Frank “was missing approximately 4 million customer accounts” at the bank. To make up the shortfall before submitting Frank’s official customer account data to JP Morgan for due diligence, the bank alleges that Javice and Amar first approached the platform’s unnamed director of engineering to create “synthetic data,” fake customer data generated by computer algorithms. .
According to JP Morgan’s claim, the engineer felt uncomfortable, asked “whether the request was legitimate” and was ultimately denied, so Javice and Amar contacted an outside source, identified simply as “a professor of data science at a New York City college.” they applied. ” in the claim.
The professor allegedly agreed and was willing to provide “creative solutions” to Javice and Amar’s data problems. What allegedly ensued was an extraordinary series of email exchanges.
‘Should I try to make them up?’
According to data science professor JP Morgan, Frank was tasked with creating information for about 4.3 million customers, including names, emails and birthdays, and it was clear from the start that the professor and Javice were both fully aware of both. the information would be fictitious.
While coming up with names for new clients, the professor allegedly emailed Javice with a proposed model for extracting the names of real people by independently testing first and last names to “make sure none of the sampled names are real.”
In another email, the professor allegedly noted how many accounts had the same personal information history, including an unnatural repetition rate for high school names and hometowns. Such a list “may appear fishy.” [him] if [he] they should have checked it,” the professor wrote. As for generating phone numbers, Javice allegedly told the professor that some duplicate numbers between accounts were acceptable, as long as “no more than 5-7%” were duplicates, according to the lawsuit.
Physical addresses proved to be one of the biggest sticking points due to the complexity of creating unique addresses, with the professor allegedly telling Javice at one point that they “spent a lot of time on the address thing.” Early in the process, the professor told Javice that he had trouble finding convincing addresses. “Should I try to make them up?” asked, Javice replied, “I just wouldn’t want the street to be in the state.”
According to JP Morgan’s lawsuit, the data science professor sent Javice a $13,300 invoice for his troubles. But the summary of his work is said to be problematic because the professor allegedly wrote separate lines of each fake data field he helped create. Javice “immediately” asked the professor to redo the invoice with a line reading “data analysis,” promised him a larger bonus and allegedly increased the invoice to $18,000, and the professor allegedly complied.
Pablo Rodríguez, the spokesperson of JP Morgan, said about it Luck disputes between the bank and Javice are believed to be settled in court.
“Our legal claims against Ms. Javice and Mr. Amar are reflected in our complaint along with the main facts. Any dispute will be resolved legally.”
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