Months before JPMorgan Chase bought financial aid startup Frank, employees expressed disbelief when their CEO, Charlie Javice, told them to change the company’s website to show it had more customers than it really did, according to the latest court filing from JPMorgan Chase.
It was January 2021, and Javice was meeting with an investment bank that she hoped would take Frank on as a client, JPMorgan Chase said in a June 15 Delaware District Court filing. The entrepreneur was preparing to sell Frank, the company she founded several years earlier. She told her team to change Frank’s public-facing customer numbers, which would impact the company’s website and communications, to state that Frank had 4.25 million student customers, the court filing said. (“Please change the HP,” Javice Slacked on Jan. 19, 2021.) Javice justified the switch by telling certain members of her team that she had changed Frank’s reporting metric—website visitors would be treated as users, the court document said.
Frank’s junior employees were surprised by the change, according to Slack messages provided by JPMorgan Chase. Some of the Jan. 11, 2021, messages said: “these look like Charlie numbers,” "charlie is the king of finding magic numbers haha” and “do we really have 4.25M students?”
The switch in the company’s public numbers caused a “groundswell of concern” at the startup that prompted a Frank executive on Jan. 19, 2021, to ask Javice to “please wait” to change the figures, the court filing said. A month later, Javice told Olivier Amar, Frank’s chief growth officer, to “pick what metrics look fantastic” and that “we’re gonna make numbers happy,” according to a text exchange from Feb. 25, 2021.
Javice was the founder and CEO of Frank, a startup that sought to revamp the financial aid process for students. In September 2021, JPMorgan Chase acquired Frank for $175 million and more than a year later, in December 2022, ended up suing Javice for securities fraud. The bank claimed Javice lied about the number of customers Frank had; she hired an unnamed data science professor to use synthetic data to allegedly show the startup had 4.26 million unique customer accounts, according to JPMorgan court filings. In reality, Frank had about 300,000 customers, according to JPMorgan Chase’s version of events as spelled out in legal documents. The Department of Justice has filed criminal charges against Javice, while the Securities and Exchange Commission has also sued her.
Javice has maintained in various court filings that JPMorgan knew exactly what it was buying and still rushed to do the deal. She has denied the allegations against her and has pleaded not guilty to the criminal charges.
The June 15 filing from JPMorgan Chase is the latest in a court battle that has seen Javice, a former media darling, be repeatedly and publicly accused of fraud. In May, a Delaware Chancery Court ruled that JPMorgan Chase was legally obligated to cover Javice’s legal bills, Fortune has reported.
In March, Amar, who was also sued by JPMorgan Chase, filed a motion to dismiss, which triggered a stay on discovery. Javice has sought a partial, documents-only, lifting of discovery.
The entrepreneur has claimed that JPMorgan Chase has “cherry-picked documents” and used them to vilify her in the press and with regulators, according to a June 1 court filing from Javice. The Frank founder alleges that she has not had access to the evidence, including the documents and emails that JPMorgan Chase has publicized, that will exonerate her, the filing said. “Defendants should not be put in a position of fighting the weighty allegations against them with their hands tied behind their backs, while the plaintiff and the press and the public freely comment and speculate on their culpability based on biased and unproven allegations before a single document has been produced,” Javice said in the June 1 filing.
The bank, in a separate June 15 filing, provided 80 pages of exhibits that included the aforementioned slack texts and a Frank presentation from 2021 that stated the startup had 4.25 million students.
JPMorgan Chase is opposing Javice’s attempt for partial discovery. Instead, JPMorgan Chase wants full discovery, which would give the bank a chance to depose Javice and Amar, as well as third-party witnesses, like former employees who were told to change Frank’s public-facing customer numbers. Full discovery would also allow the bank to depose the data science professor Javice allegedly paid $18,000 to create synthetic data used to dupe JPMorgan Chase into buying Frank.
A Javice spokesman could not be reached for comment.
