Financial giant JPMorgan Chase is on the rocks and filed a lawsuit against Charlie Javice, a 30-year-old young businessman. JP Morgan bought a startup made by Javice named Frank for USD 175 million, but Javice said that millions of users were faked.
Javice has made a name for himself since he was young and was included in the prestigious Forbes 30 under 20 list in 2019. He founded Frank's startup in the same year.
As quoted by us from the Daily Mail, Frank basically offers software to facilitate the process if there are students who need financial assistance to continue their studies at university.
Well, Javice and another executive at the company, Olivier Amar, allegedly paid data scientists USD 18,000 to create fake customer lists. JPMorgan says around 4 million users on Frank are fake.
This was found out after JPMorgan asked for proof of claims for the number of users, in which Javice and Amar allegedly falsified a database of names, addresses, schools and dates of birth of fictitious students.
Frank claims to have around 4,265,000 customer accounts, in fact the number is less than 300 thousand. It was found that when they try to send an email to that user, 70% of the emails bounce back.
However, the purchase price of USD 175 million was overpaid. Javice got USD 10 million as part of the merger with JPMorgan, with a USD 20 million bonus following. Amar gets USD 5 million, with a bonus of USD 3 million. The two joined JPMorgan after the acquisition.
JPMorgan itself was criticized for not being careful when conducting due diligence, the inspection process before acquiring a company. "This raises questions about whether JPMorgan blew too much money too soon," said Mike Mayo, market analyst at Welss Fargo.