The financial giant is suing the founder of the Marc Rowan-backed startup it acquired, alleging fintech Frank sold the financial giant on a “lie.”
JPMorgan Chase is suing the 30-year-old founder of high-profile fintech startup Frank, which it acquired for $175 million
Founded in 2016 by former CEO Charlie Javice, Frank provides software aimed at improving the student loan application process for young Americans seeking financial assistance. Her lofty ambition to turn the startup into an “Amazon for higher education” has attracted billionaire Mark Rowan, Frank’s lead investor, according to Crunchbase, as well as Aleph, Chegg, Reach Capital, Gingerbread Capital and SWAT Equity. Received backing from prominent venture backers such as Partners.
A lawsuit filed in the U.S. District Court in Delaware late last year alleges that Javice pitched to JP Morgan in 2021 that more than 4 million users used Frank’s tool to apply for federal aid. It claims to have been pitched about When JP Morgan asked for evidence during its due diligence, Javis said, “Fake customers – the names, addresses, dates of birth, and other personal information of 4,265,000 ‘students’ who never really existed.” In fact, according to the lawsuit, Frank had less than 300,000 customer accounts at the time.
“Javice initially opposed JPMC’s request, arguing that they could not share their customer list due to privacy concerns,” the complaint continues. “After JPMC alleges, Javice chose to create millions of Frank’s customer accounts out of sheer cloth.” The complaint included screenshots of a presentation Javice provided to JP Morgan. , which shows Frank’s growth and claims to have over 4 million customers.
The same week JP Morgan filed a lawsuit against Javice, Javice filed a lawsuit against JP Morgan. He launched a series of unsubstantiated investigations against Mr. Javis,” and then “viciously crafted dismissals for cause.” [JP Morgan] to deny the millions of compensation she owed. As part of these investigations, the complaint alleges that JP Morgan “falsely accused Mr. Javis of wrongdoing” during and after the acquisition of Frank.
“After JPMC’s hasty acquisition of Charlie’s Rocket business, JPMC realized it could not circumvent existing student privacy laws, committed an illegal act, and sought to win back the deal,” Alex Spiro, Javis’ attorney, told Forbes. “Charlie whistled and then sued. JPMC’s latest suit is nothing but a cover.”
In a 30 Under 30 post, when asked about the biggest hurdle facing the company, Javice replied, “scaling.”
Frank’s chief growth officer, Olivier Amar, is also named in JP Morgan’s complaint. Javice and Amar initially claim that they commissioned Frank’s top engineer to create a fake customer list. When he refused, Javice sought help from “data his science professor at a college in the New York City area.” Using the data of some individuals who have already started using Frank, he created his 4.265 million fake customer accounts and Javice paid him his $18,000. The complaint included a screenshot of the professor’s invoice, and Javice said he went to great lengths to ensure that the research documentation was destroyed or altered to avoid frowning. claim. Amar, meanwhile, spent $105,000 to purchase another dataset of his 4.5 million students from a company called ASL Marketing, according to the complaint. Amar and he ASL Marketing have not yet responded to requests for comment.
Bipartisan lawmakers in Congress sounded the alarm about Frank in 2020, calling on the FTC to investigate its “deceptive practices” and issue a temporary injunction against the company to stop them. In the letter, lawmakers, including Rep. Lloyd Smucker and Rep. Haley Stevens, said, “Frank is contributing false hope and confusion to students and unnecessary extra work for financial aid administrators. I am concerned,” he said. “Furthermore, we suspect that the company uses data collected from misleading students to make a profit by selling the data to third-party advertisers. does not make it easier to get bailout funds, but instead appears to be a way for Frank to mine student data and use it for profit.” Frank was then warned by the Consumer Protection Agency. I have received the letter. Javice’s attorney, Spiro, did not immediately respond to a request for comment on the FTC’s letter.
When JP Morgan acquired Frank in September 2021, it hired Javice, Amar and other Frank staff as employees. Havis graduated from the Wharton School of the University of Pennsylvania. forbes 30 List of under 30s in the financial industry in 2019. forbes Second, Frank helped 300,000 students apply for financial aid. Two years later, when she announced her Morgan acquisition on LinkedIn, she said at the time, “at more than 6,000 colleges, she served more than 5 million students.” (In her 30 Under 30 submission, when asked what the biggest hurdle facing the company was, Javice replied, “Scaling.”)
“Javice chose to fully create Frank’s millions of customer accounts.”
Since Frank was acquired, she has been JP Morgan’s managing director, overseeing Chase’s student products, according to her LinkedIn. She received approximately $10 million as part of the merger and negotiated an additional $20 million retention bonus for her to be paid after the vesting date if maintained in good standing. Amar, who became the executive director of student solutions at JP Morgan, received about $5 million from the deal, as well as negotiated a $3 million retention bonus, the complaint says, according to his LinkedIn.the lawsuit was previously reported wall street journal.
Once the deal closed, JP Morgan demanded a client list from Frank so the bank could begin marketing products and services to those students, the lawsuit says. According to the lawsuit, Javice and Amar sent lists of data obtained from ASL Marketing and another third-party his vendor, Enformion. When JP Morgan sent his marketing emails to a test of his supposed 400,000 Frank customers, the results were “disastrous,” the company claims. Only about a quarter of all emails were delivered, and only 1% of them were opened, the complaint alleges.
As a result of “abnormally low returns” from that campaign, JP Morgan has re-examined what it thought it knew about Frank and has now discovered what it claims to be a fake list.
“In every aspect of her interactions with JPMC, Javice either (i) reveals the truth about her startup and accepts Frank’s actual value, or (ii) lies to inflate Frank’s We had the option of getting rewarded from inflation,” the lawsuit said. “Javice chose to lie every time, and there is evidence to show that he was committing fraud over and over again to deceive JPMC. Deliberately used false representations in the merger agreement to fraudulently induce JPMC to undertake the merger.”
Javice’s complaint against J.P. Morgan is that the bank failed to “use Javice and Frank’s acumen to attract a young and diverse new audience to Chase’s services” and instead “frank’s historic customers”. pursued a “poorly conceived business plan” focused on
“From the outset, Chase grossly mismanaged its investment and decided to withdraw it rather than pursue it further,” Javis’ complaint said.
Amar was fired in October and Javice in November. Several other former Frank employees are still working at JP Morgan, according to LinkedIn.
asked at forbes A woman under the age of 30 offered the worst advice she’d ever received and responded, “Be patient.”