Startup employees questioned customer stats before acquisition

Employees of a startup purchased by JPMorgan Chase expressed disbelief when the company’s founder directed them to boost their customer count ahead of the acquisition, according to internal messages released Thursday in a legal filing.

The founder, Charlie Javice, instructed employees to change “public-facing numbers” of college aid platform Frank to 4.25 million customers in January 2021, JPMorgan alleged in the filing. Frank had fewer than 300,000 real customers when JPMorgan bought it in September 2021, the bank has alleged.

“Do we really have 4.25M students?” one Frank employee asked in a January 2021 Slack thread.

“Is this real?” another asked.

“Charlie is king of finding magic numbers,” wrote another employee, whose names were redacted in the filing.

The release of private staff messages is part of the latest salvo in the legal dispute between Javice and JPMorgan, which paid $175 million for the startup. JPMorgan, the biggest U.S. bank by assets and a steady acquirer of fintech startups, sued Javice in December 2022, alleging that the founder had lied about her company’s scale to close the deal.

According to Thursday’s filing, Javice justified the change in user stats by telling employees that website visitors counted as customers, the bank alleged.

In its original suit, JPMorgan alleged that Javice hired a data science professor to concoct fake accounts after an employee refused to do so.

Javice’s problems have intensified in recent weeks. In April, the startup founder was criminally charged by the Department of Justice and sued by the Securities and Exchange Commission, both which accused her of fraud related to the company sale.

Javice has said in court filings that JPMorgan knew how many users Frank had and that the bank sought to blame her for its mistakes.

A lawyer for Javice didn’t immediately respond to messages left late Thursday.