Jan 13, 2023 15:00:00

A 29-year-old founder is accused of ``creating a fictitious user list of over 4 million people and tricking JP Morgan into acquiring a startup for about 19 billion yen''

Founded in 2016, financial startup Frank has garnered attention for rolling out a platform to support the cumbersome student loan application process, and is expected to raise $175 million in 2021 by holding company

JPMorgan Chase . was acquired at a rate of about 19.2 billion yen). However, Frank's founder, 29-year-old Charlie Jarvis, filed a lawsuit claiming that he 'created more than 4 million fake users, exaggerated the number of customers, and tricked JPMorgan Chase into acquiring it.' was awakened

JP Morgan Says Startup Founder Used Millions Of Fake Customers To Dupe It Into An Acquisition
https://www.forbes.com/sites/alexandralevine/2023/01/11/jp-morgan-fake-customers-frank-charlie-javice/

JPMorgan Claim Charlie Javice's Startup Is a Fraud Raises Spending Worries (JPM) - Bloomberg
https://www.bloomberg.com/news/articles/2023-01-12/jamie-dimon-s-acquisition-spree-stained-by-29-year-old-s-startup

JPMorgan Bought College Financial-Aid Platform for $175 Million—and Now Says Most of Its Users Were Fake - WSJ
https://www.wsj.com/articles/jpmorgan-bought-college-financial-aid-platform-for-175-millionand-now-says-most-of-its-users-were-fake-11673470572

JPMorgan Chase shutters student financial aid website Frank
https://www.cnbc.com/2023/01/12/jpmorgan-chase-shutters-student-financial-aid-website-frank.html

In the United States, where university tuition is very high, many college students use federal government subsidies and student loans, but the application required 'The Free Application for Federal Student Aid (FAFSA )” is a very complicated application process. Founded in 2016, Frank is a startup that provides a platform to simplify the application process for this FAFSA. In an interview held in 2018, Mr. Jarvis, who was 25 years old at the time, said he wanted to become an Amazon for higher education.

When discussing the possibility of acquiring Frank with JPMorgan Chase in the summer of 2021, Mr. Jarvis appealed that ``Frank has 4.25 million users.'' In the end, JPMorgan Chase bought Frank for $175 million, and Jarvis took over as JPMorgan Chase's managing director of student products.

However, when JPMorgan Chase requested a list of Frank's customers after the transaction closed and sent marketing emails for student products to 400,000 people on the list, only about a quarter of the emails were sent, and It turned out that only 1% were opened. JPMorgan Chase, who questioned this 'abnormally poor return', investigated the customer list received from Frank and found that the information on the list was fake.

According to a lawsuit filed by JPMorgan Chase in late 2022, Jarvis and Olivier Amarr, who was Frank's chief business growth officer at the time, asked collaborators to 'fake 4,265,000 fictitious students.' A list of names, addresses, dates of birth, and other personal information for each person has been created. Based on this list, Mr. Jarvis made a presentation and completed the acquisition by JPMorgan Chase, but it is said that the actual number of Frank's customer accounts was less than 300,000. Amar also purchased a dataset of 4.5 million students from a marketing company in order to hide the lie after the acquisition was completed.

Court filings include emails exchanged with an anonymous data science researcher Jarvis asked to create the list, along with excerpts explaining how to forge fictitious customer information. JPMorgan Chase also acquired Frank's technology systems as part of the acquisition, which gave him access to his e-mail, according to people familiar with the matter.

In its complaint, JPMorgan Chase said, 'Mr. Jarvis has always ``discovered the truth about the startup and accepted Frank's actual value'' or ``inflated Frank's value.'' She had the choice of lying to a company and getting an inflated reward.'' Mr. Jarvis chose to lie every time. It shows what we have done,” he said. Jarvis was fired from JPMorgan Chase in November 2022 and Amar was fired from JPMorgan Chase in October.

Meanwhile, Mr. Jarvis filed a lawsuit against JPMorgan Chase the same week the lawsuit was filed by JPMorgan Chase. In the complaint, Jarvis alleges that JPMorgan Chase launched a 'series of unsubstantiated investigations' beginning in the spring of 2022 and maliciously fabricated dismissals to kick JPMorgan Chase out. Jarvis' attorney, Alex Spiro, said JPMorgan Chase faced student privacy law issues and filed a lawsuit against Jarvis to undo the deal.

JP Morgan Chase has already closed Frank's

official website .