America’s biggest financial institution, JPMorgan Chase, has shut down Frank, a college aid platform it bought for $175 million, accusing its founder of creating over 4 million fake accounts.
The bank bought the platform in 2021 from founder Charlie Javice and she joined the institution as part of the terms of the purchase.
According to details from the lawsuit that JPMorgan brought against her, she had initiated the deal by approaching the institution. Then, she gave false details about the scale of the startup.
“To cash in, 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 JPMC to purchase Frank for $175 million. 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,” the lawsuit claimed.
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However, the whole scheme came apart when the company sent out marketing emails to 400,000 customers on the website and about 70 per cent bounced bank.
JPMorgan alleged that a data scientist in New York had helped her create the fake accounts after her engineering chief refused to do so for ethical reasons. The bank said it obtained the incriminating emails between her and the professor.
In her defense, her lawyer argued that the bank fired her after buying her business to avoid paying her what they owed her. Then, the lawyer further said that JPMorgan could not find a way to work around student privacy laws, which is why it couldn’t use the platform for long.
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