JPMorgan Chase is accusing 30-year-old entrepreneur Charlie Javice of fabricating data to deceive investors into buying her education startup for $175 million. According to the lawsuit, Javice and another executive at the company paid a data scientist $18,000 to create a list of fake customers when its own employee refused.
The lawsuit alleges that Javice created four million fictitious customer accounts to increase the credibility of her fintech company, called Frank when she sold it to the bank in 2021.
This is not the first time Javice has come under scrutiny, with Congress members in 2020 expressing concern over Frank’s practices. JPMorgan is now seeking damages, claiming that it was misled by false customer data.
JPMorgan Chase is accusing a young entrepreneur of lying to them in order to inflate the value of her education startup, which the financial giant purchased for $175 million last year.
According to a lawsuit filed in U.S. District Court in Delaware, Charlie Javice, the 30-year-old founder of the company, Frank, allegedly created four million fake customer accounts to convince JPMorgan that the fintech was worth more than it actually was.
The complaint claims that when JPMorgan asked for customer data during their due diligence process, Javice “chose to invent several million Frank customer accounts out of whole cloth.” According to the lawsuit, Javice paid a data scientist $18,000 to create the list and also purchased a separate data set of 4.5 million students from the firm ASL Marketing for $105,000.
JPMorgan claims it was misled by false customer data and is now seeking damages. The lawsuit also names Frank’s chief growth officer Olivier Amar, alleging that he was complicit in the deception.
This is not the first time that Javice has come under fire. In 2020, bipartisan members of Congress called on the Federal Trade Commission to investigate Frank’s “deceptive practices” and issued a temporary restraining order. In her 30 Under 30 submission, Javice said that the biggest hurdle the company was facing was “scaling.”
JPMorgan is now claiming that the “lie” that Frank had more than 4 million users led them to acquire the company. After the acquisition, Javice was appointed as a managing director at JPMorgan overseeing student-focused products. She and Amar both reportedly received millions in compensation for their roles in the company.
Javice and Amar have both filed lawsuits against JPMorgan in response to the bank’s allegations. Javice’s lawyer, Alex Spiro, has called the lawsuit “nothing but a cover.” He claims that JPMorgan “realized they couldn't work around existing student privacy laws, committed misconduct and then tried to retrade the deal.”
Interestingly, Spiro is also representing Elon Musk in a civil lawsuit brought by a group of Tesla shareholders who allege that they were duped by a misleading tweet.
The outcome of Javice’s case could have a major impact on the fintech industry, as it could potentially have a chilling effect on any future deals between startups and larger companies.
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