A fintech company that JP Morgan Chase spent hundreds of millions of dollars to acquire may have been built on a spate of lies, a new lawsuit from JP Morgan Chase says. If what the investment bank said was true, it all started with a check for $18,000 to a New York City-area data science professor.
On December 22, 2022, JPMorgan sued Charlie Jarvis, the millennial founder of financial aid platform Frank, and its chief growth officer, Olivier Amar, alleging the duo fabricated about 4 million non-existent funds. account and say that these users are using Frank’s services. JPMorgan Chase acquired the company in September 2021 for $175 million.
The investment bank shut down Frank on Jan. 12, weeks after the lawsuit was filed. JPMorgan Chase still pointed out in the lawsuit that although it has always believed that it has acquired a company that is “deeply involved in the college student market” and has more than 4 million users, it ultimately acquired a customer with “less than 300,000” accounts. list.
Jarvis’s attorney, Alex Spiro, did not respond to Fortune’s request for comment, but denied the allegations against Jarvis to other news outlets. According to Bloomberg, Jarvis sued JPMorgan in December 2022, saying the bank fired her for investigating Frank. Spiro told the media that the investment bank’s lawsuit was “nothing more than a front.” A lawyer representing Amal could not be reached by Fortune.
JPMorgan said that when it first discussed the acquisition with Jarvis in 2021, in the eyes of JPMorgan, Frank was a company with “nearly 4 million customer accounts not served by the bank.” To bridge the account gap before submitting Frank’s official client account data to it for due diligence, Jarvis and Amar initially turned to an anonymous director of engineering at the platform to create “synthetic data,” the investment bank said. , that is, fake customer information generated by computer algorithms.
JPMorgan’s lawsuit states that the engineer was put off by this, asked “whether this request was legal,” and ultimately rejected his request, so Jarvis and Amar allegedly turned to outside sources, the lawsuit is only vague Describing him succinctly as “a data science professor at a New York City-area university.”
The professor agreed and was willing to offer “creative solutions” to Jarvis and Amar’s data problems, the suit says. The lawsuit shows that the two parties exchanged a large number of emails to this end.
“Should I try making up addresses?”
The JPMorgan lawsuit shows that the data science professor was tasked with creating data on nearly 4.3 million customers for Frank, including names, emails and birthdays, and that the professor and Jarvis allegedly were clear from the start that they were completely It is understood that such information will be fictitious.
When creating new customer names, the professor allegedly emailed Jarvis a suggested model that would be able to weed out names that actually existed by testing first and last names in isolation to “ensure that none of those picks were real.” of.”
In another email, the professor allegedly found numerous accounts with the same history of personal information, including high school names and hometowns repeated at an unusually high rate. “If audited [by him], such lists would look very suspicious [to him],” the professor wrote. The suit states that in creating the phone number, Jarvis allegedly told the professor that even if the account phone number appeared A certain amount of repetition is also acceptable, as long as the repetition rate does not exceed “5%-7%”.
Physical addresses proved to be one of the biggest problems, given the complexity of creating unique addresses, the lawsuit said. At one point, the professor is said to have told Jarvis they were “wasting too much time on addresses”. Early in the process, the professor allegedly told Jarvis that he was having trouble finding trusted addresses. “Should I try to make up addresses?” he asked, to which Jarvis replied, “Just don’t include street names that don’t exist in America.”
The JPMorgan lawsuit says the data science professor sent Jarvis a $13,300 bill for the issue. However, its work summaries allegedly went awry because the professor allegedly took down individual expense items for all the falsified information he helped create. The lawsuit says Jarvis “immediately” asked the professor to redo the bill and write only one fee — “data analysis” — while promising a bonus and raising the bill to $18,000. The professor then allegedly complied with the request.
JPMorgan spokesman Pablo Rodriguez told Fortune that the dispute between JPMorgan and Jarvis can only be resolved in court.
He said: “In our complaint, we set out our legal requirements against Ms. Jarvis and Mr. Amal, as well as key facts. Any disputes will be resolved through legal process.” (Fortune Chinese Network)
Translator: Feng Feng
Reviewer: Xia Lin
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 the investment bank is to be believed, it all went wrong with an $18,000 check to a New York City-area data science professor.
On Dec. 22, 2022, JP Morgan filed a lawsuit against Charlie Javice, the millennial founder of student aid facilitating platform Frank, and the company’s chief growth officer Olivier Amar, claiming the pair fabricated around 4 million nonexistent accounts us that they said service , which JP Morgan purchased for $175 million in Sep. 2021.
The investment bank shut down Frank on January 12, weeks after the suit was first filed. The bank maintains in its lawsuit that while it had been expecting to purchase a business “deeply engaged with the college-aged market segment” with over 4 million users , what it actually received was a customer list containing “no more than 300,000” accounts.
Alex Spiro, Javice’s legal representation, did not reply to Fortune’s request for comment, but has denied the allegations against her to other news outlets. Javice sued JP Morgan in December 2022 alleging the bank used an investigation into Frank as an excuse from her excuse to her job with the company, Bloomberg reported. Spiro told the outlet that the bank’s lawsuit was “nothing but a cover.” Fortune was not able to reach representation for Amar.
JP Morgan is alleging that in 2021, when the bank and Javice first discussed an acquisition, Frank was “almost 4 million customer accounts short of its representations” to the bank. To make up for the deficit before presenting Frank’s official customer account data to JP Morgan for due diligence, the bank claims that Javice and Amar turned first to the platform’s unnamed director of engineering to create “synthetic data”—fake customer information generated by computer algorithms.
According to JP Morgan’s lawsuit, the engineer felt uncomfortable, asking “whether the request was legal” and eventually declined, so Javice and Amar allegedly resorted to an external source, referred to merely as a “data science professor at a New York City area college ” in the lawsuit.
The professor allegedly agreed, according to the suit, and was willing to provide “creative solutions” to Javice and Amar’s data problems. What enforced, according to the lawsuit, was an extraordinary series of email exchanges.
“Should I attempt to fabricate 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 JP Morgan’s lawsuit, and it was allegedly made clear from the onset that the professor and Javice were both fully aware that the information would be fictitious.
When crafting the new customers’ names, the professor allegedly emailed Javice with a proposed model to weed out real people’s names by testing first and last names independently, to “ensure none of the sampled names are real.”
In another email, the professor allegedly noted how many of the accounts’ personal information histories were the same, including an unnatural rate of recurrence for high school names and hometowns. Such a list “would look fishy to [him] if [he] were to audit it,” the professor wrote. When it came to creating phone numbers, Javice allegedly told the professor some duplicated numbers among the accounts was acceptable, as long as no more “than 5%-7%” were copies, according to the suit.
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 they were “wasting too much time on the address thing.” Early on in the process, the professor allegedly told Javice he was having trouble finding believable addresses. “Should I attempt to fabricate them?” he asked, to which Javice answered: “I just wouldn’t want the street to not exist in the state.”
For his troubles, the data science professor sent Javice a $13,300 invoice, according to JP Morgan’s lawsuit. But the summary of his work allegedly proved problematic, as the professor had allegedly written down individual line items of each fake information field he had helped. Javice “immediately” asked the professor to redo the invoice with a single line reading “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, a JP Morgan spokesperson, told Fortune that the disputes between the bank and Javice are set to be ironed out in court.
“Our legal claims against Ms. Javice and Mr. Amar are set out in our complaint, along with the key facts. Any dispute will be resolved through the legal process,” he said.
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