JPMorgan Chase has alleged that a college financial planning platform, called Frank, duped it into purchase by faking the number of customers.
The bank has now sued the fintech startup’s founder Charlie Javice following a post-deal probe, reported Bloomberg.
In the lawsuit, the bank said that Javice, along with another of the firm’s executive Olivier Amar, inflated the number of customer accounts.
The New York-based lender bought Frank in 2021 in a $175m deal.
It has now alleged having been misled into believing that Frank had a client base of around 4.3 million, though it had less than 300,000 clients.
According to The Wall Street Journal (WSJ), the bank unravelled the anomalies when 70% of these addresses it used in an email campaign turned out to be undeliverable.
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The complaint seen by Forbes reads: “Javice first pushed back on JPMC’s request, arguing that she could not share her customer list due to privacy concerns. After JPMC insisted, Javice chose to invent several million Frank customer accounts out of whole cloth.”
This complaint also names Frank’s chief growth officer Olivier Amar.
Along with Javice, Amar is said to have approached Frank’s director of engineering to create fake customer accounts through algorithm-generated data.
The two are accused of having paid $18,000 to a data science professor to create the fake accounts after the engineer denied the work.
Meanwhile, Javice has initiated a counter lawsuit against the bank stating that JPMorgan is planning to distract after flouting student privacy rules.
In an emailed statement seen by Bloomberg, Javice’s attorney Alex Spiro called the lawsuit by JPMorgan “nothing but a cover”.
Spiro argued that the allegations against Javice were a pretext to dismiss her and deny her a retention bonus.
The bank “committed misconduct and then tried to retrade the deal,” the news publication quoted Spiro as saying.