The lawsuit alleges that Charlie Javice, the founder of a startup called Frank, claimed that his platform had more than four million users, when in fact, the number of users was around 3,00,000. at that time.
New Delhi,UPDATED: January 13, 2023 at 3:42 p.m
By Divyanshi Sharma: US bank JP Morgan Chase is suing the founder of a 30-year-old Fintech company after he said his platform created many users. The lawsuit alleges that Charlie Javice, the founder of a startup called Frank, claimed that his platform had more than four million users, when in fact, the number of users was around 3,00,000. at that time. The rest of the users, the bank said, was created to sell the startup.
JP Morgan Chase acquired Frank for $175 million (Rs 1,450 crore) in 2021. The suit was filed in late 2022 in the US District Court in Delaware. lawsuit against Javice.
What does the lawsuit say?
As previously reported, the lawsuit alleges that Javice claimed to have more than 4 million users on its platform, Frank, at the time of its purchase. In fact, the complaint says there were less than 3,00,000 users at the time. The lawsuit also alleges that Javice lied about the platform’s performance and published a list of fake data that included users’ names, user addresses, dates of birth, and personal details.
“Defendant Charlie Javice started a small start-up company called Frank that appeared to have the potential to grow and become a successful business in the future, and it appeared to have proven success early on. But in order to make money, Javice decided to lie, including lies about Frank’s success, Frank’s size, and Frank’s depth of market penetration to induce JPMC to buy the Frank for $175 million,” the lawsuit said.
The complaint also alleges that Javice initially refused to share customer information, citing ‘confidentiality concerns’. However, when he was forced to share the information, he created a ‘customer account from whole cloth’.
“At the time of JPMC’s request, Frank had nearly 4 million customer accounts under JPMC’s representation. Instead of telling the truth, Javice pushed back against JPMC’s request, saying he could not share his client list due to privacy concerns. After JPMC came into being, Javice chose to create several million Frank customer accounts out of whole cloth,” the lawsuit says.
How are fake accounts created?
Additionally, the lawsuit alleges that the list of fake user accounts was created by a data science professor from a NYC university who used ‘synthetic data’ techniques for the purpose and was paid $18,000 to of the service. Those accounts were then shared with another merchant for validation, the complaint said.
The lawsuit also cites the startup’s chief marketing officer, Olivier Amar, as saying that before they (Javice and Amar) approached the data science professor, a senior engineer at the company asked to create a fake list. A marketing company called ASL Marketing is named in the lawsuit.
JP Morgan’s complaint also alleges that Javice tried to cover up the entire issue by ordering brokers to ‘delete the fake listings’.
The startup, Frank, markets itself as a platform to help students who are trying to get student loans. It is known to simplify the application process for its users and was launched in 2017. The startup is described by Javice as ‘Amazon for higher education’.
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