EXCLUSIVE: JPMorgan Chase filed a lawsuit against Charlie Javice in connection to her startup Frank Financial Aid—which the bank purchased for a whopping $175 million in September 2021 after just a couple of months of due diligence.
“We are concerned that Frank is creating false hope and confusion for students while contributing to unnecessary extra work for financial aid administrators,” the July 21, 2020, letter stated. “We further suspect that the company may be using the data collected from misled students to make a profit by selling data to third-party advertisers.”
“At an initial July 2021 meeting, Javice told JPMC that Frank had significant engagement with college-aged students, a market segment that JPMC wanted to grow,” the filing states. “Javice stated that Frank had 4.25 million users, expressly defining a ‘user’ as an individual who created a Frank account by entering a first name, last name, email, and phone number on Frank’s website.”
“JPMC’s diligence request was problematic for Javice and Frank: Frank did not have 4.265 million customer accounts,” the lawsuit alleged. “At the time of JPMC’s request, Frank was almost 4 million customer accounts short of its representations to JPMC.”I’ve made a network that’s if not comparable if not better than what Thiel has to offer me only in Silicon Valley.
The Frank director declined to help, prompting Javice to allegedly turn to a New York City data science professor who had previously advertised his “‘creative solutions’ to data problems.” By first using data from the “293,192 individuals who had started or submitted a FAFSA application through Frank,” the professor was able to create 4.256 million sham accounts, the complaint says.
“While the ASL List arrived too late for Javice and the Data Science Professor to use in creating the Fake Customer List, Javice and Amar later used the ASL List to further deceive JPMC and cover their tracks after the Frank acquisition closed, again providing JPMC data for Frank customers who did not exist,” the lawsuit states.
“Unsurprisingly, the results of the marketing test campaign were disastrous,” the lawsuit states. “Specifically, JPMC sent marketing test emails to what it believed were 400,000 unique Frank customers. Of the individuals contacted, only 28 [percent] of emails were delivered, compared to a 99 [percent] delivery rate JPMC usually sees with similar campaigns.”
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