JP Morgan Says Startup Founder Used Millions of Fake Customers to Dupe It into an Acquisition

by contentwriter

Author: West Kingston

JP Morgan recently confirmed that a startup founder used millions of fake customers to dupe it into an acquisition.

The bank has been in the news lately for a series of scandals, and this latest revelation is sure to add fuel to the fire. 

According to reports, JP Morgan was taken in by the phony customer base because the founder had created such a convincing backstory for the startup.

Overview of the JP Morgan Case

When JP Morgan bought the startup, it did so with the belief that it had acquired a company with a large, active customer base. However, it was later revealed that the customer base was largely fabricated by the startup founder to get the buyout.


JPMorgan Chase is suing the 30-year-old creator of Frank, a popular fintech startup it purchased for $175 million. The founder allegedly fabricated a massive list of fictitious users to wow the financial behemoth into buying it.

Former CEO, Charlie Javice started Frank in 2016, which provides software to streamline the application process for student loans for young Americans looking for financial assistance. 

Marc Rowan, a billionaire, and well-known venture capitalists like Aleph, Reach Capital, Chegg Inc, SWAT Equity Partners, and GingerBread Capital supported the founder’s lofty plans to turn the firm into an Amazon for higher learning.

The lawsuit was submitted to the U.S. District Court in Delaware last year. It alleges that Javice sold JP Morgan in 2021 in the lie that over 4 million users had joined up for Frank’s program to apply for federal assistance. JP Morgan only became aware of the scam after Javice reached out to them for acquisition talks. The company is currently investigating the matter and has not yet decided whether or not to pursue legal action.

What Kind of Fake Customers Were Used?

JP Morgan claims that the founder used fake customer accounts with falsified documents to make their startup appear more attractive. They claim to have found at least 4 million fake accounts with hundreds of thousands of those accounts being registered in the United States.


Javice allegedly compiled a sizable list of fake clients when JP Morgan requested evidence during due diligence. The list included the names, residences, birthdates, and other personal data for 4.265 million fictitious students.

According to the lawsuit, Frank had less than 300,000 customer base as at that time. The JP Morgan complaint also makes reference to Frank’s chief growth officer Olivier Amar. 

It said that Javice and Amar first sought a senior engineer at Frank to make the fictitious client list. Their request was rejected, thereafter, Javice solicited a data science expert at a New York City area college for assistance.

He allegedly generated 4.265 million fictitious customer accounts using information from some individuals who had started using Frank. 


Javice paid him $18,000 and had them verified by a third party on her instruction, said JP Morgan. The complaint states that Amar spent $105,000 to purchase a different data set of 4.5 million pupils from the company ASL Marketing. 

The fraud was so well executed that many of these fake customers had active bank accounts, credit histories, and even payment information.

Take Away

When it comes to startups, it’s important to do your research. Don’t just take a company’s word for it when they say they have millions of customers. Make sure to verify every piece of information provided, if you are not sure how to do that, ask for help.

Also, be wary of anyone who seems too good to be true. If a startup founder is promising the moon and stars, there’s probably a reason for that, and it’s probably not good news for you.


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