The saying "buyer beware" is not an old adage for nothing.

Sometimes, even the most financially savvy businesses get suckered in by hoaxers.

Our old buddy JP Morgan fell into quite the trap recently when the finance giant purchased a company for $175 million and it turned out that the company's owner sold it based, allegedly, on false information.

A fintech startup bought by JP Morgan Chase for millions may have been built on a bed of lies, according to a new lawsuit filed by JP Morgan. And if the investment bank is to be believed, it all went wrong with an $18,000 check to a New York City-area data science professor.

On Dec. 22, JP Morgan filed a lawsuit against Charlie Javice, the millennial founder of student aid facilitating platform Frank, and the company's chief growth officer Olivier Amar, claiming the pair fabricated around 4 million nonexistent accounts that they said used their service, which JP Morgan purchased for $175 million in Sep. 2021.

The investment bank shut down Frank on Thursday, weeks after the suit was first filed. The bank maintains in its lawsuit that while it had been expecting to purchase a business "deeply engaged with the college-aged market segment" with over 4 million users, what it actually received was a customer list containing "no more than 300,000" accounts.

As a financial guru and mathematics wizard, my quick calculations tell me that 300,000 is slightly less than 4 million.

And by slightly, I mean a whole heck of a lot.

JP Morgan is alleging that in 2021, when the bank and Javice first discussed an acquisition, Frank was "almost 4 million customer accounts short of its representations" to the bank. To make up for the deficit before presenting Frank's official customer account data to JP Morgan for due diligence, the bank claims that Javice and Amar turned first to the platform's unnamed director of engineering to create "synthetic data" — fake customer information generated by computer algorithms.

According to JP Morgan's lawsuit, the engineer felt uncomfortable, asking "whether the request was legal" and eventually declined, so Javice and Amar allegedly resorted to an external source, referred to merely as a "data science professor at a New York City area college" in the lawsuit.

So, according to the suit, they looked up a professor to make up some numbers for them because their in-house computer nerd had a conscience.

The email exchanges between the tech company and the professor are quite revealing. Almost shocking to see.

When crafting the new customers' names, the professor allegedly emailed Javice with a proposed model to weed out real people's names by testing first and last names independently, to "ensure none of the sampled names are real."

In another email, the professor allegedly noted how many of the accounts' personal information histories were the same, including an unnatural rate of recurrence for high school names and hometowns. Such a list "would look fishy to [him] if [he] were to audit it," the professor wrote. When it came to creating phone numbers, Javice allegedly told the professor some duplicated numbers among the accounts was acceptable, as long as no more "than 5%-7%" were copies, according to the suit.

Physical addresses proved to be one of the biggest sticking points due to the complexity of creating unique addresses, according to the lawsuit, with the professor at one point allegedly telling Javice they were "wasting too much time on the address thing." Early on in the process, the professor allegedly told Javice he was having trouble finding believable addresses. "Should I attempt to fabricate them?" he asked, to which Javice answered: "I just wouldn't want the street to not exist in the state."

They were working deep in cahoots. They had to go back and forth for a long time before this professor was able to fabricate enough emails, phone numbers, and addresses.

In the end, Javice sold the company in a $100+ million deal, and how much did she pay the prof who did all the grunt work for, allegedly, faking all the accounts that were necessary to sell the company?

$13,300.

$13,300 to be on the hook for a multi-million dollar scam.

For his troubles, the data science professor sent Javice a $13,300 invoice, according to JP Morgan's lawsuit. But the summary of his work allegedly proved problematic, as the professor had allegedly written down individual line items of each fake information field he had helped create. Javice "immediately" asked the professor to redo the invoice with a single line reading "data analysis," promising him a bigger bonus and increasing the invoice to $18,000, according to the lawsuit, and the professor then allegedly complied with the request.

This prof got the short end of the stick.

JP Morgan, they're gonna recover from this loss. They have the money. But the owners of Frank and their accomplices are about to be in deep, deep trouble if the alleged facts in this suit are correct.