JP Morgan has sued Charlie Javice. She founded fintech startup Frank in 2016 as a provider of student loan application software for young Americans. The US bank acquired Frank in September 2021 for $175 million, but bought a cat in the bag. During acquisition talks, Javice boasted that Frank had more than four million users. Afterwards, it came out that at the time, it was only three hundred thousand customer accounts.
According to business magazine Forbes, which accessed the financial giant's indictment, Javice and co-director Olivier Amar allegedly had a huge list of fake users created to entice JP Morgan to buy the company. Both were fired from the bank last fall.
Before the acquisition, Javice also managed to attract investors to its company, including billionaire Marc Rowan, Aleph, Chegg, Reach Capital, Gingerbread Capital and SWAT Equity Partners. The goal was to build Frank into "an Amazon for higher education.
Incidentally, under the guise that attack is the best defense, the founder in turn dragged JP Morgan to the fence. The bank allegedly started an investigation unfairly in order to find a reason to fire her. She also claims she is still entitled to several millions.
The bank could have been warned, by the way. Some members of Congress sounded the alarm as early as 2020 about Frank's "deceptive practices," which involved making a mockery of students' privacy by selling their data to outside advertisers. Frank was taken to task for this by the U.S. consumer watchdog.
