LinkedIn/Charlie J
The founder of finance app Frank, Charlie Javier was arrested and charged with defrauding JPMorgan Chase (JPM) of $175 million. After charging the inventor of a student aid network with massive fraud, JPMorgan Chase has pulled down the website that it bought for $175 million two years ago.
On LinkedIn, Javice wrote that Frank was already “helping over 5 million students at over 6,000 universities” and touted the JPMorgan transaction.
The financial behemoth alleges that fintech startup Frank sold it a “lie” and is suing its 30-year-old founder Charlie Javice and other former executives for allegedly lying about the company’s success, including by assembling a sizable database of fictitious users to deceive the bank when it requested proof.
Frank, which Javice refers to as “Amazon for higher education,” received that massive nine-figure investment from JPMorgan in 2021, after the startup had already received backing from Marc Rowan, a billionaire, and a number of other investors, including VC firm Aleph, edtech investor Reach Capital, and homework-helper app maker Chegg.
The complaint against the defendant states as follows.
NATURE OF THE ACTION 1. Defendant Charlie Javice founded a small start-up business known as Frank that seemingly had the potential to grow and become a successful enterprise in the future and appeared to have had early proven success.
But to cash in, Javice decided to lie, including lying about Frank’s success, Frank’s size, and the depth of Frank’s market penetration in order to induce JPMC to purchase Frank for $175 million. Specifically, Javice represented in documents placed in the acquisition data room, in pitch materials, and through verbal presentations that 1 “Frank” is a trade name; the legal name of the corporation at the time of acquisition described below was TAPD, Inc. Case 1:22-cv-01621-MN Document 1 Filed 12/22/22
More than 4.25 million students had created Frank accounts to begin applying for federal student aid using Frank’s application tool. Then, when JPMC specifically requested proof of that claim during due diligence, Javice used “synthetic data” techniques to create a list of 4.265 million fake customers — a list of names, addresses, dates of birth, and other personal information for 4.265 million “students” who did not actually exist. In reality, Frank was nearly 4 million short of its representations to JPMC. Source: Court Listener
Javice denied the claims and countersued in February, said The Wall Street Journal. JP Morgan shut down the app online using this URL https://withfrank which now says, “To file your Free Application for Federal Student Aid (FAFSA), visit StudentAid.gov.”
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