{"id":42378,"date":"2023-01-16T05:40:09","date_gmt":"2023-01-16T05:40:09","guid":{"rendered":"http:\/\/www.brandon.ddtest.info\/multisite-test\/jpmorgan-paid-175-million-for-a-hot-startup-now-it-claims-its-ceo-faked-4-million-clients\/"},"modified":"2023-01-16T05:40:09","modified_gmt":"2023-01-16T05:40:09","slug":"jpmorgan-paid-175-million-for-a-hot-startup-now-it-claims-its-ceo-faked-4-million-clients","status":"publish","type":"post","link":"http:\/\/www.brandon.ddtest.info\/multisite-test\/jpmorgan-paid-175-million-for-a-hot-startup-now-it-claims-its-ceo-faked-4-million-clients\/","title":{"rendered":"JPMorgan paid $175 million for a hot startup. Now it claims its CEO faked 4 million clients."},"content":{"rendered":"<p> \n<\/p>\n<div id=\"\">\n<p>Charlie Javice launched her company Frank in 2017 when she was 24 and a recent Ivy League grad with the goal of helping students apply for college financial aid. By 2021, she was <a href=\"https:\/\/www.forbes.com\/profile\/charlie-javice\/?sh=32dac1d19619\" target=\"_blank\" rel=\"nofollow noopener\">lauded<\/a> as a business visionary and had sold her startup to JPMorgan Chase for <a href=\"https:\/\/www.businesswire.com\/news\/home\/20210921005169\/en\/JPMorgan-Chase-Acquires-Frank-the-Leading-College-Financial-Planning-Platform-for-Students\" target=\"_blank\" rel=\"nofollow noopener\">$175 million<\/a>.\u00a0<\/p>\n<p>Now, JPMorgan claims that Frank&#8217;s inspiring story of helping more than 5 million students get into college was largely a fabrication, according to a lawsuit filed last month by the bank. Javice allegedly paid a data science professor $18,000 to contrive a list of more than 4 million fake student names in order to convince the financial giant to shell out the purchase price, the suit claims.<\/p>\n<p>The allegations are the latest case of a highly lauded millennial company founder accused of fudging the truth to score financially, ranging from <span class=\"link\"><a href=\"https:\/\/www.cbsnews.com\/news\/sam-bankman-fried-ftx-court-appearance\/\" target=\"_blank\" data-invalid-url-rewritten-http=\"\" rel=\"noopener\">Sam Bankman-Fried<\/a><\/span> of FTX to disgraced Theranos founder <span class=\"link\"><a href=\"https:\/\/www.cbsnews.com\/news\/elizabeth-holmes-sentenced-theranos-fraud-11-years\/\" target=\"_blank\" data-invalid-url-rewritten-http=\"\" rel=\"noopener\">Elizabeth Holmes<\/a><\/span>. Meanwhile, Frank, once expected to help JPMorgan expand its reach among college students, has now been shuttered.\u00a0<\/p>\n<aside class=\"newsletter_signup \">\n<figure class=\"embed embed--type-newsletter-widget embed--float-none embed--size-large embed--type-iframe\" data-ads=\"{\" wordcount=\"\">\n<\/figure>\n<\/aside>\n<p>&#8220;[T]o cash in, Javice decided to lie, including lying about Frank&#8217;s success, Frank&#8217;s size and the depth of Frank&#8217;s market penetration in order to induce [JPMorgan] to purchase Frank for $175 million,&#8221; the bank alleges in the complaint.<\/p>\n<p>Alex Spiro, an attorney for Javice, denied the allegations in a statement emailed to CBS MoneyWatch. JPMorgan &#8220;knows what they filed is retaliatory and misleading,&#8221; he said. &#8220;They were provided all the data upfront for the purchase of Frank and Charlie Javice highlighted the restrictions placed by student privacy laws during due diligence.&#8221;<\/p>\n<p>He added, &#8220;When [JPMorgan] couldn&#8217;t work around those privacy laws after the purchase of Frank, JPMC began twisting the facts to cover their tracks and are falsely accusing Charlie Javice to retrade the deal.&#8221;<\/p>\n<p>JPMorgan, which said Javice no longer works at the company, said it is asking for unspecified punitive and compensatory damages at trial.<\/p>\n<h2>&#8220;Proven acquisition machine&#8221;<\/h2>\n<p>The lawsuit outlines why JPMorgan was attracted to Frank when Javice, a graduate of the University of Pennsylvania, approached the bank in the summer of 2021. She touted the startup&#8217;s 4.25 million users, students who had started or completed the Free Application for Federal Student Aid, or FAFSA, through Frank.\u00a0<\/p>\n<figure class=\"embed embed--type-twitter-tweet embed--float-none embed--size-medium lazyload\" data-require=\"third-party\/twitter-widgets\">\n<div class=\"embed__content-wrapper\">\n<blockquote class=\"twitter-tweet\">\n<p lang=\"en\" dir=\"ltr\">Forbes 30 Under 30: <\/p>\n<p>\u2014 Charlie Javice: JP Morgan says she used millions of fake clients to dupe it into acquisition;<br \/>\u2014 Caroline Ellison: CEO, Alameda Research, money fraud;<br \/>\u2014 Elizabeth Holmes: CEO, Theranos, biotechnology convicted fraudster;<br \/>\u2014 Sam Bankman-Fried: you know him. <a href=\"https:\/\/t.co\/CUCjlUcEtw\" rel=\"nofollow noopener\">pic.twitter.com\/CUCjlUcEtw<\/a><\/p>\n<p>\u2014 Yuriy Gnatyuk \ud83c\uddfa\ud83c\udde6 (@ygnatyuk_) <a href=\"https:\/\/twitter.com\/ygnatyuk_\/status\/1613639953430323214?ref_src=twsrc%5Etfw\" rel=\"nofollow noopener\">January 12, 2023<\/a><\/p><\/blockquote><\/div>\n<\/figure>\n<p>The FAFSA, which has a reputation for being a notoriously difficult application, is required by colleges, states and the Department of Education to qualify for financial aid, scholarships and more.<\/p>\n<p>That pool of young customers was apparently like catnip for JPMorgan, which noted in its lawsuit that it believed &#8220;Frank was a proven acquisition machine for college-aged students.&#8221;<\/p>\n<p>But, the lawsuit alleges, when JPMorgan asked Javice for proof that she had more than 4 million customers, she at first pushed back, claiming she couldn&#8217;t share the names due to privacy issues. Frank in fact had fewer than 300,000 customer accounts, the suit claims.<\/p>\n<p>&#8220;After JPMC insisted, Javice chose to invent several million Frank customer accounts out of whole cloth,&#8221; the lawsuit alleges.\u00a0<\/p>\n<h2>4.2 million fakes alleged<\/h2>\n<p>Javice allegedly turned to an unnamed professor at a New York City-area college to fix her problem, paying him $18,000 to create a list of names.\u00a0<\/p>\n<p>&#8220;Ultimately, the data science professor created a list of 4.265 million fake customer accounts (the &#8216;Fake Customer List&#8217;) as Javice had requested,&#8221; JPMorgan claims in the suit.<\/p>\n<p>JPMorgan, unaware of the alleged problems at this point, completed the $175 million purchase, but realized something might be wrong when it sent out a marketing test campaign to Frank&#8217;s customer list. The results were &#8220;disastrous,&#8221; according to the complaint.\u00a0<\/p>\n<p>&#8220;JPMC sent marketing test emails to what it believed were 400,000 unique Frank customers,&#8221; the suit alleges. &#8220;Of the individuals contacted, only 28% of emails were delivered, compared to a 99% delivery rate JPMC usually sees with similar campaigns. Just 1.1% of the delivered emails were opened, compared to 30% for a typical JPMC campaign.&#8221;<\/p>\n<p>Now suspicious, the bank reviewed Frank&#8217;s business, as well as emails, chats and messages between Javice, the data science professor and Frank&#8217;s chief growth officer, which the suit claims revealed the issues with Frank&#8217;s client list.\u00a0<\/p>\n<p>&#8220;In every aspect of her interactions with JPMC, Javice had a choice between (i) revealing the truth about her startup and accepting Frank&#8217;s actual value and (ii) lying to inflate Frank&#8217;s value and reaping the rewards from that inflation,&#8221; the lawsuit alleges. &#8220;Javice chose each time to lie, and the evidence shows that time and again she layered fraud upon fraud to deceive JPMC.&#8221;<\/p>\n<p>    <!-- data-recirc-source=\"chartbeat\" --><\/p>\n<aside class=\"component list recirculation component--type-recirculation \">\n<p><h3 class=\"component__title\">Trending News<\/h3>\n<\/p>\n<\/aside>\n<p><!-- tags -->\n    <\/div>\n<p><script async src=\"\/\/platform.twitter.com\/widgets.js\" charset=\"utf-8\"><\/script><br \/>\n<br \/>\n<br \/><a href=\"https:\/\/news.google.com\/__i\/rss\/rd\/articles\/CBMiamh0dHBzOi8vd3d3LmNic25ld3MuY29tL25ld3MvY2hhcmxpZS1qYXZpY2UtZnJhbmstanBtb3JnYW4tY2hhc2UtbGF3c3VpdC1hbGxlZ2VzLTQtbWlsbGlvbi1mYWtlLWN1c3RvbWVycy_SAW5odHRwczovL3d3dy5jYnNuZXdzLmNvbS9hbXAvbmV3cy9jaGFybGllLWphdmljZS1mcmFuay1qcG1vcmdhbi1jaGFzZS1sYXdzdWl0LWFsbGVnZXMtNC1taWxsaW9uLWZha2UtY3VzdG9tZXJzLw?oc=5\">Source link <\/a><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Charlie Javice launched her company Frank in 2017 when she was 24 and a recent Ivy League grad with the goal of helping students apply for college financial aid. By 2021, she was lauded as a business visionary and had sold her startup to JPMorgan Chase for $175 million.\u00a0 Now, JPMorgan claims that Frank&#8217;s inspiring &hellip;<\/p>\n","protected":false},"author":1,"featured_media":42379,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":[],"categories":[161],"tags":[],"_links":{"self":[{"href":"http:\/\/www.brandon.ddtest.info\/multisite-test\/wp-json\/wp\/v2\/posts\/42378"}],"collection":[{"href":"http:\/\/www.brandon.ddtest.info\/multisite-test\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"http:\/\/www.brandon.ddtest.info\/multisite-test\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"http:\/\/www.brandon.ddtest.info\/multisite-test\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"http:\/\/www.brandon.ddtest.info\/multisite-test\/wp-json\/wp\/v2\/comments?post=42378"}],"version-history":[{"count":0,"href":"http:\/\/www.brandon.ddtest.info\/multisite-test\/wp-json\/wp\/v2\/posts\/42378\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"http:\/\/www.brandon.ddtest.info\/multisite-test\/wp-json\/wp\/v2\/media\/42379"}],"wp:attachment":[{"href":"http:\/\/www.brandon.ddtest.info\/multisite-test\/wp-json\/wp\/v2\/media?parent=42378"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"http:\/\/www.brandon.ddtest.info\/multisite-test\/wp-json\/wp\/v2\/categories?post=42378"},{"taxonomy":"post_tag","embeddable":true,"href":"http:\/\/www.brandon.ddtest.info\/multisite-test\/wp-json\/wp\/v2\/tags?post=42378"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}