Not-so Frank Students Account

JPMorgan Chase has taken down the website for a student-aid platform it acquired two years ago for $175 million after accusing the founder of widespread fraud. The financial giant claims it was sold a “lie” by fintech startup Frank, and is suing 30-year-old founder Charlie Javice and other former executives for reportedly lying about how successful the company was, namely by creating a massive database of fake users to fool the bank when it asked for proof.

5 Million Students Over 6,000 Colleges - JPMorgan made that whopping nine-figure investment in Frank - described by Javice as “Amazon for higher education”—in 2021 after the startup had already attracted support from billionaire Marc Rowan and a range of others, including VC Aleph, edtech investor Reach Capital, and homeowrk-helper app maker Chegg. At the time, Javice boasted about the JPMorgan deal on LinkedIn, writing that Frank was already “serving over 5 million students at over 6,000 colleges.”

JPMorgan claimed Javice lied “about Frank’s success, Frank’s size, and the depth of Frank’s market penetration.” Javice “represented in documents placed in the acquisition data room, in pitch materials, and through verbal presentations [that] more than 4.25 million students had created Frank accounts to begin applying for federal student aid using Frank’s application tool.”

JPMorgan claims in its suit that it learned the truth about Frank only after sending emails to about 400,000 customers, the overwhelming majority of which bounced back. Instead of getting a business with 4 million clients, JPMorgan learned months later that it had gotten stuck with one with “fewer than 300,000 customers,” the bank’s lawsuit contends.

Fake Accounts - Javice is accused of hiring a data scientist to invent fake accounts, giving the impression during JPMorgan’s due diligence process that Frank’s customer base contained more people than the city of Los Angeles—when in reality, it was smaller than Lexington, Kentucky. Javice’s roster allegedly contained “a list of names, addresses, dates of birth, and other personal information for 4.265 million “students” who did not actually exist.” The bank claims Javice initially fought its request to provide customer metrics, arguing that sharing such a list raised “privacy concerns.” After the bank’s team insisted, Javice “chose to invent several million Frank customer accounts out of whole cloth.”

The suit includes screenshots of Javice’s presentations where she depicted Frank’s growth, showing more than 4 million customers.