JPMorgan sued the founder of the startup it acquired

JPMorgan Chase is suing the founder of a college financial planning platform it bought for $175 million. The bank accuses the startup of creating a list of millions of fake users to complete the deal.

JPMorgan had agreed to acquire Frank, the online portal that allows users to apply for financial aid and enroll in online college courses in minutes, in late 2021.

Frank's 30-year-old founder and CEO, Charlie Javice, told JPMorgan that more than four million people have signed up for the platform, the lawsuit details. During the due diligence process of the case, when evidence about these users was requested, the allegation that fake customers - names, addresses, dates of birth and other personal information were created for 4.2 million students that did not actually exist came to light. CEO Javice and Chief Growth Officer Olivier Amar allegedly asked a senior engineer at the firm to create these fake personas. In return, the duo paid 18 thousand dollars to a data science professor.

After the agreement between the bank and the startup was completed, it was revealed that the startup actually had 300 thousand users. Javice filed a lawsuit against JPMorgan to force it to cover his legal fees. In this process, the former CEO says that the bank used such a method to fire him after the acquisition.

The development could raise more questions about JPMorgan's spending spree in the technology space. The bank has recently faced criticism from investors for not being transparent about its massive $14 billion technology budget.