JP Morgan Chase, an American bank, has sued a 30-year-old Fintech startup founder, alleging that she lied about the number of users on her website. According to the lawsuit, Charlie Javice, the creator of a firm called Frank, stated that her platform had over four million members when, in fact, the number was approximately 300,000 at the time. The bank claims that the rest of the users were made up in order to sell the startup.
In 2021, JP Morgan Chase paid USD 175 million (Rs 1,450 crore) for Frank. The action against Javice was filed in the United States District Court for the District of Delaware around the end of 2022.
What exactly does the lawsuit say?
According to the lawsuit, Javice claimed to have over 4 million members on her platform – Frank, at the time of the acquisition. According to the lawsuit, less than 3,000,000 users were at the time. According to the lawsuit, Javice lied about the platform’s performance and created a bogus data list containing users’ names, addresses, dates of birth, and other personal information.
“Defendant Charlie Javice formed a tiny start-up business known as Frank that seemingly had the potential to develop and become a successful enterprise in the future, and appeared to have had early proven success. However, in order to cash in, Javice chose to mislead, including lying about Frank’s performance, size, and the depth of Frank’s market penetration, in order to entice JPMC to purchase Frank for $175 million,” according to the lawsuit.
According to the complaint, Javice originally declined to divulge information on their customers, citing ‘privacy concerns’. However, when being pressured on releasing the information, she established ‘customer accounts out of whole cloth’.
“At the time of JPMC’s request, Frank was over 4 million client accounts short of its representations to JPMC. Rather than divulge the facts, Javice initially refused JPMC’s request, claiming that she was unable to share her customer list owing to privacy concerns. After JPMC insisted, Javice chose to invent many million Frank client accounts from scratch,” according to the lawsuit.
How did the fake accounts come into existence?
Furthermore, the lawsuit claims that the bogus user account list was produced by a data science professor from a college in New York City who used synthetic data techniques for the purpose and was paid USD 18,000 for his services. The accounts were subsequently shared with a third-party vendor for ‘validation,’ according to the complaint.
The lawsuit also mentions the startup’s Chief Growth Officer, Olivier Amar, and claims that before they (Javice and Amar) approached the data science professor, a top-level engineer at the firm was ordered to produce the bogus list. ASL Marketing, a marketing business, was also cited in the action.
JP Morgan’s complaint further says that Javice had sought to cover up the entire problem by asking the vendor to ‘remove the phoney list’.
Frank bills itself as a platform for assisting students who are seeking school loans. It was launched in 2017 and is noted for simplifying the application procedure for its users. The firm has been termed by Javice as the ‘Amazon for higher education’.
Follow The420.in on