JPMorgan Chase is suing the founder of a college financial planning platform it acquired for $175 million, accusing her of creating a list of millions of fake users to get the deal completed.
According to the suit, Frank’s 30-year-old founder and then CEO Charlie Javice told JPMorgan that more than four million people had signed up for the tools.
Asked for proof during due diligence, she allegedly produced a list of “fake customers – a list of names, addresses, dates of birth, and other personal information for 4.265 million ‘students’ who did not actually exist,” says the suit.
Javice and Frank’s chief growth officer Olivier Amar are accused of asking a senior engineer at the firm to create the list. He refused and so the pair paid a data science professor $18,000 to build the list, says the suit.
In reality, an investigation after the deal was completed found that the firm had fewer than 300,000 customers.
Javice has filed her own suit against JPMorgan in an effort to force the bank to cover her legal fees.
She says the bank began investigating the Frank acquisition as a pretext to fire her – having brought her in as head of student solutions post-deal – and deny her more than $20 million in bonuses.
The controversy will likely raise further questions over JPMorgan’s tech spending spree. The bank has recently faced criticisim from investors over lack of transparency in its mammoth $14 billion technology budget.