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JPMorgan May Have Bought The Wells Fargo Of Student-Loan BusinessesFor once, though, Elon Musk’s lawyer sees no fake accounts.

• Author:Jon Shazar
• Publish date:Jan 12, 2023

For once, though, Elon Musk’s lawyer sees no fake accounts.

Given all that he has to do for Elon Musk—especially since Musk canned Twitter’s whole legal department right around the time he was also racking up an almost inconceivable number of potential current and future lawsuits—you’d think Alex Spiro would be busy enough. But the lawyer, who’s also done some bang-up work for former hedge-fund manager and former billionaire Phil Falcone, can’t resist a good fake accounts case, given how well-versed therein he thinks he became while trying (and ultimately failing) to save Musk from having to make good on his purchase of Twitter. And looking over these 4 million-plus accounts at Frank, the college financial-aid startup JPMorgan Chase bought in 2021, he's just not seeing any.

“After JPM rushed to acquire Charlie [Javice]’s rocketship business, JPM realized they couldn’t work around existing student privacy laws, committed misconduct and then tried to retrade the deal. Charlie blew the whistle and then sued,” he said.

Well, sayeth Jamie Dimon & co., look harder. Not much harder, Alex, but a bit.

The company had fewer than 300,000 real users, the suit said, less than 10% of the stated 4.25 million figure.

“Rather than reveal the truth, Javice first pushed back on [JPMorgan’s] request, arguing that she could not share her customer list due to privacy concerns,” the bank said in its court filing. “After [JPMorgan] insisted, Javice chose to invent several million Frank customer accounts out of whole cloth….”

JPMorgan said when the bank asked for a list of customers, Ms. Javice and [Olivier] Amar hired a data-science professor to create a list of fake names and addresses to trick the bank. The unnamed professor, who was paid $18,000, used computer-generated information to show Frank’s purported user base, including details like names, birthdays and schools they attended, the suit alleged…. “Our plan was to sample first name and last name independently and then ensure none of the sampled names are real,” the suit alleges the professor wrote to Ms. Javice.

The startup also bought a list of 4.5 million student names from a marketing firm to help aid its deception after the deal closed, JPMorgan said.

JPMorgan Bought College Financial-Aid Platform for $175 Million—and Now Says Most of Its Users Were Fake [WSJ]

For more of the latest in litigation, regulation, deals and financial services trends, sign up for Finance Docket, a partnership between Breaking Media publications Above the Law and Dealbreaker.

Tagsterms:JPMorgan ChaseStudent LoansOlivier AmarAlex Spirolitigationmergers and acquisitionsBanksFrankfraudCharlie JaviceFake Accountslaw

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