Charlie Javice, a 30-year-old entrepreneur being sued by JPMorgan after the bank bought her education startup, claims boss Jamie Dimon knew the size of her company before going through with the deal and claims of fraud are baseless.
JPMorgan, the largest US bank by assets, paid the $175 million for Frank in September 2021, an effort to deepen ties with students.
The bank said it was believed more than 4.25 million students had created an account on Frank.
However, when JPMorgan sent marketing test emails to a list of Frank’s clients the company provided, only 28% of them were delivered, the bank claimed.
JPMorgan said it is seeing a 99% delivery rate overall with similar campaigns and is now accusing Javice of “misleading” the bank with a list of bogus customer names.
Charlie Javice, 30, who is being sued by JPMorgan after they acquired her educational startup for $175 million, has denied the bank’s fraud allegations
Javice claims Jamie Dimon, the CEO of JPMorgan, was aware of the size of her company before going through with the deal
JPMorgan fired Javice last November and sued her the following month in a U.S. district court in Delaware.
Javice and another executive at the company, Olivier Amar, allegedly paid a data scientist $18,000 to create a list of fake clients to inflate Frank’s true size when his own employee refused, a lawsuit alleges.
Javice accuses the bank of blaming her for a failed strategy in a lawsuit filed in federal court in December.
Javice denies coming up with the 4 million names allegedly made up using artificial intelligence, and instead is suing the bank for $28 million in compensation she claims owed after the bank pulled out.
She insists bank chief Jamie Dimon was eager to buy her company.
The bank alleges that Javice and another executive, Olivier Amar, pictured, paid a data scientist $18,000 to compile a list of fake clients to inflate Frank’s real size
Charlie Javice, 30, says the bank may have tarnished her reputation for life
Dimon told Javice in a pre-deal meeting that he felt his team should “get the deal done.” He has since described the deal as “a big mistake.”
Javice says the bank may have tarnished its reputation for life.
JPMorgan paid $175 million for what it said was a company deeply involved in the student market segment with 4.265 million customers; instead, it received a company with fewer than 300,000 customers,” the bank said in the lawsuit filed last month.
However, a lawyer for Javice has denied the allegations.
“After JPM rushed to take over (Javice’s) missile business, JPM realized they couldn’t get around existing student privacy laws, committed misconduct and then tried to reverse the deal,” Javice’s lawyer said in January, adding that the bank’s lawsuit “was nothing.” just a cover.’
“We stand by our allegations and this dispute will be resolved through legal process,” a bank spokesperson told Monday. WSJ.
Javice, the daughter of a successful New York-based asset manager, bought a Miami Beach condo for just under $1.5 million in May 2021, according to Miami-Dade real estate data.
She started Frank a few years after graduating from Wharton Business School, she revealed during an interview about her entrepreneurial success with a former tutor, which the school uploaded to its YouTube channel.
In her initial defense, Javice did not dispute that fewer than 500,000 people used Frank to fill out financial aid forms.
She stated that she briefed JPMorgan executives on this in pre-acquisition meetings and clarified that the majority of the nearly 4.3 million users were individuals who visited the website to read financial aid articles or relied on Frank to help them in understanding the university funding process. .
Javice bought a condo in this Miami Beach complex in May 2021, according to Miami-Dade property records
In the lawsuit, JPMorgan said the company was pitched by Javice on a “lie” that more than four million users had signed up to use the tool.
After the bank asked for proof of that claim during due diligence, she and Amar allegedly created a database of names, addresses, schools, and dates of birth for fictitious students.
The data suggested that Frank had about 4,265,000 client accounts – in reality, fewer than 300,000 were legitimate, it is claimed
The bank says the scheme unraveled when it tried to email those users and that 70 percent of its emails came back.
Javice refuted the accusation that she created a fabricated list of users to deceive the bank. Instead, she claimed JPMorgan had asked for a “synthetic dataset of users” that reflected Frank’s actual customers as a way to monitor its users and avoid privacy violations by not sharing their real names.
She claimed that JPMorgan knew that the user number she provided was based on synthetic data, not actual user data.
Javice argued that JPMorgan’s finance team would have been able to determine the number of customers she had based on other metrics in her proposal, such as her total marketing costs.
She informed the bank that she spent about $5 per customer on marketing costs and spent a total of $2.25 million on marketing.
Javice argued that JPMorgan’s allegations were an attempt to cover up his own wrongdoings, including a plan to take advantage of information about past applicants for Free Applications for Federal Student Aid (Fafsa), which allegedly violated federal regulations.
She claimed the bank was struggling after discovering new restrictions on filing Fafsa forms last summer that would have made Frank less able to file applications on behalf of students.
Javice earned $10 million as part of the merger with JPMorgan, with a $20 million bonus to follow at a later date. Amar earned $5 million from the deal, with a similar bonus of $3 million.