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The bank believes that Javice collaborated with a data scientist to manufacture millions of fake accounts and make the platform appear more successful than it really is.
JPMorgan Chase & Co (NYSE: JPM) has shut down a website it recently acquired for a whopping sum of $175 million. Its Thursday decision comes amid an ongoing lawsuit it has with the platform’s founder Charlie Javice.
JPMorgan Chase Claims Website Was a Big Lie
According to the bank’s claim in its suit, Javice portrayed Frank – a financial aid platform for students, in a different light from its true reality. This was when she approached the bank about a potential sale in mid-2021.
At the time, Javice allegedly claimed that Frank was being used by over 5 million students in over 6,000 institutions.
Upon that information, and what seemed to check out, JPMorgan Chase acquired Frank by September 2021 and even brought Javice on as part of the deal. To the bank, the sale presented a clear opportunity to further cement its relationship with college students.
In light of recent findings, however, JPMorgan believes that Javice may have manufactured nearly 4 million fake customer accounts. The bank says it discovered this, several months into the acquisition after it sent out marketing emails to a batch of 400,000 Frank customers. According to its December lawsuit, nearly 70% of the emails it sent bounced back. So, this has led the bank to believe that Javice collaborated with a data scientist to manufacture millions of fake accounts. Part of the lawsuit filing reads:
“To cash in, Javice decided to lie, including lying about Frank’s success, Frank’s size, and the depth of Frank’s market penetration in order to induce JPMC to purchase Frank for $175 million.”
Charlie Javice Countersues
Meanwhile, the 30-year-old Javice has also filed counterclaims at the federal court in Delaware. She claims that the bank is trying to find a way not to pay her millions of dollars that it owes her in legal expenses.
Javice says JPMorgan carried out some internal investigation last spring and fired her from her position as head of student solutions in November. She says the move is only an attempt by JPMorgan to not pay her a $20 million bonus payment she rightly deserves.
Javice’s attorney, Alex Spiro, also insists to the journal that JPMorgan’s lawsuit holds no water. He says the bank just wants to renegotiate the deal after finding out it can’t find its way around existing privacy laws for the students on the platform.