A millennial founder who sold her company to JP Morgan for $175 million allegedly paid a college professor $18,000 to manufacture 4 million accounts. Their email exchange is a doozy

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A 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. And, if investment banking is to be believed, it all went haywire with an $18,000 check to a New York City-area data science professor.

On Dec. 22, JP Morgan filed a lawsuit against Charlie Javice, the millennial founder of student aid facilitation platform Frank, and the company’s director of growth, Olivier Amar, claiming that the duo fabricated around 4 million non-existent accounts. who they say used their service, which JP Morgan bought for $175 million in September 2021.

The investment bank closed Frank on Thursday, weeks into the process. The bank contends in its lawsuit that while it expected to buy a company “deeply involved in the college-aged market segment” with more than 4 million users, what it actually received was a customer list containing “no more than 300,000” accounts. .

Alex Spiro, Javice’s legal representative, did not respond. Fortuneof comments, but denied the allegations against her to other media outlets. Javice sued JP Morgan in December, alleging the bank used an investigation into Frank as an excuse to fire her from her job at the firm. Bloomberg reported. Spiro told the paper that the bank’s lawsuit was “nothing more than a cover-up”. Fortune failed to obtain representation for Amar.

JP Morgan is claiming that in 2021, when the bank and Javice first discussed a takeover, Frank was “almost 4 million client accounts short of his representations” for the bank. To make up the shortfall before submitting Frank’s official client account data to JP Morgan for due diligence, the bank claims Javice and Amar first turned to the platform’s unnamed director of engineering to create “synthetic data” – false information customer data generated by computer algorithms.

According to the JP Morgan filing, the engineer felt uncomfortable asking “if the request was legal” and ended up declining, so Javice and Amar allegedly turned to an outside source, referred to only as a “data science professor at a College of the City of New York” in the lawsuit.

The professor allegedly agreed, according to the lawsuit, and was willing to provide “creative solutions” to Javice and Amar’s data problems. What followed, according to the lawsuit, was an extraordinary series of email exchanges.

‘Should I try to make them?’

The data science professor was tasked with creating data for nearly 4.3 million customers for Frank, including names, emails and birthdays, according to the JP Morgan lawsuit, and it was reportedly made clear from the outset that the teacher and Javice were fully aware that the information would be fictitious.

In coming up with the names of the new clients, the professor allegedly emailed Javice a proposed model for eliminating real people’s names, testing first and last names independently to “ensure none of the sample names are real.”

In another email, the teacher allegedly noted how many accounts’ personal information histories were the same, including an unnatural rate of recurrence for high school names and hometowns. Such a list “would appear suspicious to [him] What if [he] were to audit him,” wrote the professor. When it came to creating phone numbers, Javice reportedly told the professor that some duplicate numbers between accounts were acceptable as long as no more than “5% to 7%” were copies, according to the lawsuit.

Physical addresses proved to be one of the biggest sticking points due to the complexity of creating unique addresses, according to the lawsuit, with the professor at one point allegedly telling Javice that they were “wasting too much time on the address”. Early in the process, the professor allegedly told Javice that he was having trouble finding reliable addresses. “Should I try making them?” he asked, to which Javice replied, “I just wouldn’t want the street to not exist in the state.”

For his troubles, the data science professor sent Javice an invoice for $13,300, according to the JP Morgan lawsuit. But his work summary proved problematic, as the professor had written individual items from each field of false information he had helped to create. Javice “immediately” asked the professor to rework the invoice with a single line saying “data analysis”, promising him a bigger bonus and increasing the invoice to $18,000, according to the lawsuit, and the professor then allegedly complied with the request. .

Pablo Rodriguez, spokesman for JP Morgan, said Fortune that disputes between the bank and Javice will be resolved in court.

“Our legal claims against Ms. Javice and Mr. Amar are presented in our complaint, together with the main facts. Any dispute will be resolved through the legal process,” he said.

This story was originally featured on Fortune.com

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