»JPMorgan alleges Charlie Javice deceived bank into purchasing $175M startup«
JPMorgan Chase contends that a 30-year-old businessman deceived it by inflating the number of college students using Frank, a financial planning website that the multinational bank paid $175 million for.
In a lawsuit filed on December 22, JPMorgan Chase claimed that Charlie Javice misled the bank into thinking that Frank “was a firm intimately involved with the college-aged market sector with 4.265 million consumers.” Javice was included on Forbes’ “30 under 30” list for finance in 2019.
According to the bombshell lawsuit filed in federal court in Delaware, “instead, it obtained a firm with less than 300,000 clients.”
Mark Rowan, the multibillionaire CEO of Apollo Global Management who was named as the site’s principal investor according to Crunchbase, is one of Frank’s supporters.
According to the lawsuit, Javice and another Frank employee, Olivier Amar, engaged a data scientist for $18,000 to create a list of fictitious names and addresses that were used to pass off as clients. According to the complaint, the scientist created a fictitious user base using computer-generated data that contained details such customer names, birthdates, and the institutions they attended.
In connection with the bank’s purchase of Frank, Javice and Amar, who held the position of chief growth officer, reportedly got $26 million in compensation, money that JPMorgan said “they would not have received but for their malfeasance.”
Frank advertised itself as a website that streamlines the application process for federal financial assistance for prospective college students.
JPMorgan said that Javice greatly exaggerated the number of site users when she contacted the bank in the summer of 2021 about a possible purchase.
The bank said in its court statement that Javice first refused to comply with its request, claiming that she was unable to provide her customer list owing to privacy issues.
Javice decided to create several million fake Frank client accounts when [JPMorgan] pushed for it.
Javice filed a countersuit a few days after JPMorgan filed its case, alleging that the bank owes her millions of dollars in legal costs that accrued as a consequence of an internal inquiry from last spring.
Javice claims that in November, the investment bank terminated her employment as the head of student solutions. She alleges that JPMorgan fired her in order to avoid paying her the $20 million bonus she was due.
JPMorgan’s lawsuit, according to her attorney Alex Spiro, was “nothing but a cover.”
Spiro said to The Post in an email, “After JPM raced to buy Charlie’s rocketship firm, JPM discovered they couldn’t maneuver past current student privacy rules, committed misbehavior, and then sought to retrade the transaction.”
“Charlie revealed the truth, then filed a lawsuit.”
Elon Musk was also represented by Spiro in his complaint, which claimed that Twitter had overstated the number of accounts that were registered on its service when Musk decided to purchase the business for $44 billion last year.
Spiro’s assertions were mocked by a JPMorgan representative, who told the Washington Post that Javice “was not and is not a whistleblower.”
The spokesman said, “Our legal claims against Ms. Javice and Mr. Amar are laid out in our lawsuit, together with the essential facts.”
Both Javice and Amar canceled their accounts on Twitter. They weren’t accessible to comment right away.
Javice compared Frank to a website that does for student loans what TurboTax does for Form 1040 in a Crain’s New York Business “40 under 40” feature.
Javice said that her experience scraping together financial assistance, scholarships, and family support to enroll at the esteemed Wharton School at the University of Pennsylvania served as inspiration for the creation of Frank.
»JPMorgan alleges Charlie Javice deceived bank into purchasing $175M startup«