The largest bank in the United States, JPMorgan Chase & Co., accuses young Jewish businessman Charlie Javis of deceiving him into buying her company for $175 million by making millions from his supposed clients.
In a lawsuit filed last month by the bank, the once-promising CEO on Forbes’ under-30 list is accused of engaging in an elaborate scheme to inflate the client list of her college financial planning startup, Frank, which JPMorgan bought in September. 2021.
The bank accused Javice and Frank, former head of growth and acquisitions Olivier Amar, of fraudulently nearly four million customers, deceived its due diligence team by hiring a data science specialist to disguise their actions, and created millions of fake profiles on the platform.
“To take advantage of this, Javis decided to lie, including lying about Frank’s success, Frank’s size, and Frank’s depth of market penetration,” the suit reads.
Javis’ lawyers, in turn, denied the accusations against their client and sued JPMorgan for allegedly trying to avoid paying her.
The 30-year-old dated Frank in 2016, when she was just 24 years old. With the stated goal of helping college students file financial aid models and saving billions in tuition, Frank and her young founder have captured the world’s attention.
But according to JPMorgan, it was mostly a hoax, or at least a highly exaggerated success story. The bank claims that instead of the 4.25 million college students Frank claimed to have had clients by the end of 2021, it had no more than 250,000.
Yes, the rich can be deceived. Call it greed. JPMorgan paid the scammer, in this case the scammer Charlie Javis, 175 million to get her college financial aid company. Turns out it was a complete scam. Add her to the list of scam entrepreneurs. Rich, right? pic.twitter.com/PURj9GWM2b
– I mean, Mr. Mustard??????? ???????? ???????? ???????? (pc_chicago) January 21, 2023
According to The New York Times ReportJavice has continued to enjoy sympathetic coverage from leading news outlets, including Forbes, Fast Company Magazine, Medium, and Insider despite repeated warning signs.
Frank was noticed by the US Department of Education shortly after its founding. In its early days, the company offered college students financial aid to cover tuition fees on a website called frankfafsa.com.
The department said at the time that FAFSA stands for Free Application for Federal Student Aid and is a registered trademark Frank used without permission. As part of the settlement agreement reached in 2018, Frank turned over the web address to the department and moved to an alternate web address.
Around the same time, one of Frank’s founders, Adi Omici, sued Javis for wage theft in Israel and was awarded compensation.
But that didn’t stop her overwhelmingly positive media coverage.
In 2018, Business Insider ran an article titled: “26-year-old founder has solution to what Bill Gates calls ‘unnecessary hurdle’ to college — and her startup is helping students get thousands off tuition.”
In the article, Javis claimed that Frank saved his users $28,000 on average.
However, in Article Posted by the outlet after JPMorgan’s lawsuit against Javice, it cited student aid expert Mark Kantrowitz as saying that Frank was only simplifying the FAFSA form filing process for students.
“Frank did nothing that would have affected the amount of help the students would have received had they filed the FAFSA themselves,” Kantrowitz told Insider. “It wouldn’t have resulted in a doubling of the amount of financial assistance.”
He added that Frank was making up numbers “at random” when describing the amount of aid users were receiving.
Javis’ close relationship with the media began in 2011, when she appeared on Fast Company’s 2011 list of the 100 Most Creative People for her role in a former startup she founded called PoverUp.
Created as a non-profit organization, the stated goal of PoverUp was to provide loans to entrepreneurs in poor countries and help lift them out of poverty, using small contributions made by college students.
But an insider investigation found no evidence that PoverUp was registered as a nonprofit. The outlet also quoted a former member of the company’s board of directors as saying it never had much traction, unlike Javis who said in 2013 that the company had raised $300,000 in loans.
Javis quickly abandoned the idea and went on to found Tapd, a company that sought to connect young professionals with job opportunities via text messaging.
The name of the company was later changed to Frank, after financial difficulties that at one point forced Javis to fire its entire team. However, Javice manages to portray the challenges as a learning moment and frame them as part of her ultimate success story.
In an email addressed to an online magazine in 2020 and obtained by Insider, a PR representative for Frank called Frank’s story “a miracle,” and noted that “Javice’s first company floundered after 18 months” and still managed to “convince [investors] to fund her next company, Frank.”
Forbes 30 under 30:
– Charlie Javis: JPMorgan says it used millions of fake customers to trick it into the acquisition;
– Caroline Ellison: CEO of Alameda Research, financial fraud;
– Elizabeth Holmes: CEO, Theranos, convicted biotech scammer;
Sam Bankman-Fried: You know him. pic.twitter.com/CUCjlUcEtw
– Yuri Gnatyuk ???????? (ygnatyuk_) January 12, 2023