A Scam, Frankly

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Legal Operations
Industry Insights

Turns out JP Morgan Chase isn't immune to scams (big banks, they're just like us!). A lawsuit filed in December alleges that the mega-bank was duped by Frank, a college financial aid start-up acquired by the firm in 2021 for $175 million. Accordingly to JP Morgan Chase, Frank fabricated some 4.25 million student accounts to appear larger than it was. “Frank offers a unique opportunity for deeper engagement with students," the financial titan said at the time of the acquisition, notes The Street. "Together, we’ll be able to expand our capabilities for students and their families, helping them financially prepare for college and other major moments in their future."

Yet, in its December suit, the bank was singing a much different tune, says CBS News: "[T]o cash in, [founder Charlie Javice] decided to lie, including lying about Frank's success, Frank's size and the depth of Frank's market penetration in order to induce [JPMorgan] to purchase Frank for $175 million. As the suit continues, when JPMorgan asked for proof of the 4.25 million accounts, Javice deflected over alleged privacy concerns that actually masked Frank's real size (only about 300,000 accounts). JPMorgan is seeking an unspecified amount in damages.

  • Javice, a UPenn grad, allegedly paid a data science professor $18,000 to fabricate the fake accounts.

30 Under 30

In addition to her pending lawsuit by JPMorgan, Javice has a second unique distinction—she was part of Forbes's 2019 list of 30 under 30. The list has included such notorious luminaries in recent years as Elizabeth Holmes, Sam Bankman-Fried, and Caroline Ellison. As Jezebel jokes, Javice is now "on another, more exclusive list: Forbes Prodigies Who’ve (Allegedly) Committed Fraud Before 35."

The Verdict

While we can’t say whether the allegations here are true or not, we can say that if you’re looking to invest in someone who is a Forbes 30 under 30…maybe do double due diligence.