If there is one issue near and dear to the hearts of every young American, it’s the crushing cost of higher education that has created a mountain of $1.6 trillion in student debt.
To help ease that pain, six years ago, at the tender age of 24, Charlie Javice launched her fintech, Frank, with the aim of making a degree affordable and accessible for all.
“College tuition is too damn high,” she posted to LinkedIn late in 2020. “We founded Frank with a rebellious spirit and a big goal: Students should pay less for college. It’s that simple.”
In that short span of time, Frank operated as an independent entity: It served roughly 5 million students by streamlining the federal student aid application process, connecting them with scholarship opportunities and advocating for emergency grants in the middle of a global pandemic. Thanks to her accomplishments, Javice was named to the Forbes “30 Under 30” list in the finance industry in 2019.
JPMorgan liked what it saw so much that its commercial banking arm, Chase, acquired the startup in September 2021 for $175 million.
“We want to build lifelong relationships with our customers,” said Jennifer Piepszak, co-CEO of consumer and community banking at Chase, in a statement announcing the deal. “Frank offers a unique opportunity for deeper engagement with students. 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.”
Now according to Forbes, the same publication that picked Javice to join its prestigious list of overachievers, JPMorgan is suing Javice for inventing 93% of its client roster.
Countersuit against JPMorgan
In reality, nearly 4.27 million names complete with addresses, dates of birth, and other personal information were allegedly invented out of thin air to pass the bank’s due diligence process. At the time the deal was struck, Frank had in fact fewer than 300,000 customers, JPMorgan claims.
The bank says it uncovered the alleged fraud after trying to email a portion of its clients, only to see roughly three-quarters bounce straight back. Of the rest that were actually delivered, just 1% were opened, yielding “disastrous” results, according to the claim.
Chase investigated the issue, saying it eventually discovered invoices that show payments made on behalf of the Frank founder in exchange for work creating the fictitious list.
Forbes reported Javice then countersued, claiming JPMorgan manufactured the claims in bad faith to terminate her employment with the bank and save itself millions in compensation owed to her.
“After JPMC rushed to acquire Charlie’s rocket-ship business, JPMC realized they couldn’t work around existing student privacy laws, committed misconduct, and then tried to re-trade the deal,” Javice’s lawyer, Alex Spiro, said in a statement emailed to Forbes. “Charlie blew the whistle and then sued. JPMC’s newest suit is nothing but a cover.”
Neither JPMorgan Chase nor Mr. Spiro could be reached by Fortune for comment.
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