Millennial entrepreneur who sold fintech to JPMorgan sued for inventing customers
If there’s one issue near and dear to the hearts of every young American, it’s the crushing cost of higher education that has created a $1.6 trillion mountain of student debt.
To alleviate this pain, six years ago, at the age of 24, Charlie Javice launched fintech Frank with the goal of making it affordable and accessible for everyone to earn a degree.
“College tuition is too high,” she wrote on LinkedIn in late 2020. “We founded Frank with a rebellious spirit and a big goal: for students to pay less for college. It’s that simple.”
During the short time Frank operated as an independent entity, it served approximately 5 million students by streamlining the federal student aid application process, connecting them with scholarship opportunities and advocating for emergency grants in the midst of a global pandemic. Thanks to her achievements, Javice was named to the Forbes “30 under 30” list in the financial industry in 2019.
JPMorgan liked what it saw so much that commercial banking arm Chase bought the startup in September 2021 for $175 million.
“We want to build lifelong relationships with our customers,” Jennifer Piepszak, co-CEO of Chase, said in a statement announcing the deal. “Frank offers a unique opportunity for deeper engagement with students. Together, we will be able to expand our capabilities for students and their families, helping them financially prepare for college and other important moments in the future.”
Now following Forbesthe same publication that selected Javice to join its prestigious list of top performers, JPMorgan is suing Javice for inventing 93% of its client list.
Counterclaim against JPMorgan
In reality, nearly 4.27 million names complete with addresses, dates of birth and other personal information were invented out of thin air to pass the bank’s due diligence process. At the time of the deal, Frank actually had fewer than 300,000 customers, JPMorgan claims.
The bank says it uncovered the alleged scam after trying to email a portion of its customers, only to see about three-quarters bounce straight back. Of the rest actually delivered, only 1% were opened, producing “disastrous” results, according to the claim.
Chase investigated the issue and said it eventually discovered invoices showing payments made on behalf of the Frank founder in exchange for work creating the fictitious list.
Forbes Javice then countersued, alleging that JPMorgan manufactured the claims in bad faith to terminate her employment at the bank and save itself millions in compensation owed to her, Javice reported.
“After JPMC rushed to buy Charlie’s rocket business, JPMC realized it could not circumvent existing student privacy laws, committed misconduct and then tried to change the deal,” Javice’s attorney, Alex Spiro, said in a statement sent to Forbes. “Charlie blew the whistle and then sued. JPMC’s latest suit is nothing more than a cover.”
Neither JPMorgan Chase nor Mr. Spiro could be reached Fortune for comment.
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