By Sam Boughedda
JPMorgan (NYSE:JPM) is said to be suing the leaders of the financial-aid business Frank, a company it acquired for $175 million in 2021.
The finance giant alleges that the company's leaders misled the bank by creating millions of fake student accounts to show it had a growing business.
The WSJ reported that the bank filed a lawsuit against Frank executives Charlie Javice and Olivier Amar last month in a Delaware Federal court. They claim widespread fraud.
Frank is marketed as a business that helps families navigate the college financial aid process.
Javice was said to have approached JPMorgan about an acquisition in the summer of 2021.
JPMorgan was reported to have said in its court filing that "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."
However, after JPMorgan insisted, "Javice chose to invent several million Frank customer accounts out of whole cloth."
Before the bank sued her, the WSJ said Javice filed a separate lawsuit against JPMorgan, stating she is owed millions in expenses incurred. The suit also says she was fired in November.
Javice also claimed JPMorgan "manufactured a for-cause termination in bad faith," while her lawyer claimed JPMorgan's lawsuit is "nothing but a cover."