JPMorgan sues entrepreneur Charlie Javice, alleging $175 million acquisition scam

JPMorgan Chase has filed a lawsuit against 30-year-old entrepreneur Charlie Javice, alleging that she lied about the number of college students using Frank, a financial-planning site that the bank acquired for $175 million.

According to the suit, Javice led JPMorgan to believe that Frank had 4.265 million customers like Roomster did back in September, when in reality it had fewer than 300,000. The suit also alleges that Javice and another executive at Frank, Olivier Amar, paid a data scientist $18,000 to fabricate a list of fake customers.

As a result of the acquisition, Javice and Amar were allegedly paid $26 million. In response, Javice has countersued, claiming that the bank owes her millions in legal expenses and that she was wrongfully terminated from her position as head of student solutions.

The background

In a “40 under 40” profile by Crain’s New York Business, Javice compared Frank to a website that offers similar services for student loans as TurboTax does for Form 1040.

Javice stated that her inspiration for starting Frank came from her personal experience of piecing together scholarships, aid and financial support from her family to attend the University of Pennsylvania’s Wharton School.

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The claim

Frank represented itself as a platform that simplified the process of filling out federal financial aid forms for prospective college students. JPMorgan alleges that when Javice approached the bank in the summer of 2021 to discuss the possibility of an acquisition, she greatly exaggerated the number of customers who had used the site.

The lawsuit

According to a lawsuit filed by JPMorgan Chase on December 22, the bank claims that Charlie Javice, who was recognized on Forbes’ “30 under 30” list in finance in 2019, misled the bank into believing that Frank, a business targeting the college-aged market segment, had 4.265 million customers, when in reality it had fewer than 300,000.

“Rather than reveal the truth, Javice first pushed back on [JPMorgan’s] request, arguing that she could not share her customer list due to privacy concerns,” the bank’s attorneys alleged in the lawsuit.

The counterclaim

In response to JPMorgan’s lawsuit, Javice filed a countersuit, asserting that the bank is responsible for millions of dollars in legal expenses that have accumulated as a result of an internal investigation that began last spring.

Javice also claims that she was wrongfully terminated from her role as head of student solutions in November and that the bank did so in order to avoid paying a $20 million bonus that she was owed. Her attorney, Alex Spiro, stated that JPMorgan’s lawsuit is a “cover-up.”

“After JPM rushed to acquire Charlie’s rocketship business, JPM realized they couldn’t work around existing student privacy laws, committed misconduct and then tried to retrade the deal,” Spiro wrote in an email shared with Grit Daily.

“Charlie blew the whistle and then sued.”

Alex Spiro, who is also Javice’s attorney, previously represented Elon Musk in a lawsuit where he alleged that Twitter had falsely represented the number of user accounts on its platform when Musk agreed to purchase the company for $44 billion the previous year.

A JPMorgan spokesperson dismissed Spiro’s assertions and stated that Javice “was not and is not a whistleblower.” The spokesperson went on to say that the bank’s legal claims against Javice and another executive, Mr. Amar, are outlined in the complaint along with the key facts.

Both Javice and Amar have deleted their Twitter accounts and were not available for comment to Grit Daily.

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