JPMorgan claims Frank founder told staff to overstate user numbers

The founder of a student finance platform acquired by JPMorgan Chase instructed her staff to change its website to show the business had far more users than it actually did, the US bank alleged in a court filing on Thursday.

The filing submitted in Delaware federal court by JPMorgan alleged that as Charlie Javice was meeting an investment banker about a potential sale of her company, she directed her team to change the company’s public-facing numbers to show it had 4.25mn student users. Javice argued internally that she was treating visitors to the Frank website as users, according to messages cited in the filing.

It is the latest salvo in a lawsuit by the banking giant accusing Javice and another Frank executive of claiming the company had 4.25mn users when in fact it had only 300,000 at the time.

In response to Javice’s initial request, Frank employees commented that “charlie is king of finding magic numbers haha” and “do we really have 4.25M students?”, according to Slack messages quoted by JPMorgan in the court filings.

Frank hired boutique investment bank LionTree in 2021 to run the sale process. JPMorgan ended up buying Frank for $175mn in 2021.

The JPMorgan filing came in response to a motion from Javice and the former Frank executive seeking to partly allow discovery to go forward in the case. JPMorgan has opposed that motion, arguing if discovery does proceed it should be in full, including a chance to depose Javice.

Javice has also been indicted separately on criminal fraud charges by US prosecutors who allege she falsified user numbers as part of the sale. 

Representatives for Javice did not immediately respond to a request for comment. In a countersuit against JPMorgan, Javice has denied the bank’s allegations of falsifying accounts. She has pleaded not guilty in the criminal case.

Javice founded Frank in 2017. The company, whose backers included Apollo Global Management’s Marc Rowan as well as Israeli venture capital firm Aleph, helped college students apply for financial aid for their education.

The episode has been a fall from grace for a budding entrepreneur — Javice, a graduate from Wharton School at the University of Pennsylvania, was 29 when she agreed to sell her company to JPMorgan. It has also raised questions about JPMorgan’s due diligence.

A Delaware court last month ordered JPMorgan to pay Javice’s legal fees for her defence team against the bank.