A former Array executive claims the $1.5 billion fintech inflated its revenue and made up fake custo

Publish date: 2024-06-27
2022-04-07T16:05:50Z

A former executive at a fintech unicorn that provides credit-score and identity-protection products to other fintechs claims it tricked its investors with bogus sales records and sold consumer-credit data to shady buyers.

Jason Owen, its former chief strategy officer, filed a lawsuit on March 29 alleging Array "manufactured false or inflated revenues" in the run-up to its Series A last year. Owen also said Array seems to have faked customers in order to "create the false illusion" of the company's success.

The lawsuit alleges that one supposed customer whose monthly spend with Array jumped by 25 times while the company was raising its Series A has nothing to do with finance and is owned by the dad of an Array employee. The customer was registered under the name Alpha Credit Group, but its mailing address corresponds to a coffee shop in Monterey, California owned by the employee's father. 

The lawsuit says the company also violated agreements with Experian, Equifax and TransUnion by selling sensitive consumer-credit data to end-users using predatory tactics, which were specifically banned by the terms of the agreements.

Owen alleges that Array's CEO, Martin Toha, froze him out of management and fired him in October in retaliation after he "noticed financial irregularities in the company's books and records and those of its affiliates." He also accused Toha of cheating him out of more than $70 million in equity after the company's value soared in two successive funding rounds in 2021.

Owen's lawsuit said investors including General Catalyst and Battery Ventures bought into the company's Series A round last year. His lawsuit said that in a Series B shortly after, the company's value shot from $250 million to $1.5 billion.

Array, which hasn't announced either fundraising round, helps other fintechs provide credit scores and other financial widgets to their customers. Its website says it obtains data from TransUnion, Equifax, and Experian.

A 2021 article in Forbes that described Array as one of the "next billion-dollar startups" said Array's customers included fintechs like SoFi and One. But Owen said that some of its most lucrative customers were rent-to-own firms, credit-repair companies, and bankruptcy lawyers who paid a premium for access to consumer-credit data that they normally couldn't get access to. He accused Array of violating terms set by big credit bureaus by sharing it.

Owen's lawsuit said Array got access to data from the credit bureaus through Pentius Inc., a company founded by Toha that describes itself as "a serial developer of web-based properties."

Toha, General Catalyst, Battery Ventures, and the big three credit bureaus didn't respond to questions about the lawsuit.

Alex Spiro, a lawyer at Quinn Emanuel who represents Array, told Insider the allegations weren't true.

"These false, self-serving claims surfaced, for the first time, after Array refused to be shaken down by a disgruntled and terminated employee," he said in an email. "We will deal with the matter in court."

Joshua Berman, a lawyer at White & Case who represents Owen, said he and his client stand by the allegations and wouldn't comment further.

Do you know more? Reach out to the reporter on this story, Jack Newsham, via Signal at 314-971-1627 using a non-work phone.

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