We’ve all heard stories of the plucky entrepreneur who started a game-changing business and managed to sell it for millions of dollars. It’s a great rags-to-riches story, and it proves the American Dream is real. But what if the business is fake?
Charlie Javice was one of those young entrepreneurs. The company she started was called Frank, and the idea was to simplify the financial aid process for college students. When JP Morgan bought the company from Javice in 2021, it was valued at $175 million, and Javice was made managing director for student solutions. Now JP Morgan is suing her for allegedly exaggerating the company’s value … by a lot.
College students are a goldmine for banks. Almost all college students need to take out a loan in order to pay for their higher education, loans they spend decades paying off while the banks collect interest.
A lot of college students are also taking out credit cards for the first time, and most of them have not been taught how to use credit cards to their advantage. Instead, they’re more likely to end up in debt to the credit card companies.
According to court documents, when JP Morgan bought Frank, Javice allegedly told the bank’s executives that the company had more than 4 million users. The idea was that, by buying Frank, JP Morgan would gain access to a database containing the names and contact details of all those users who would no doubt be in need of financial assistance and a bank to provide its services.
Once the deal was done, the bank said it ran a test marketing campaign to a segment of Frank’s customers. Out of 400,000 emails the bank sent, only 28% were delivered – meaning 72% of the emails never even made it into a digital inbox. Of the 28% that were delivered, only 1.1% were opened, which is an extremely low open rate for any email marketing campaign.
Since JP Morgan had also acquired Javice’s own emails from her Frank account as part of the merger, they looked through them to see if they could get an idea of what had gone wrong. They found emails that allegedly revealed that Javice had hired a data science professor to create fake customers. According to the lawsuit, Javice invented millions of fake customers to inflate the value of the company she was selling to JP Morgan.
Javice responded to the lawsuit by filing her own lawsuit against the bank, alleging the company still owes her money from the merger, and that it is responsible for paying her legal expenses.
Litigating on behalf of businesses and individuals who have been the victims of fraud or who have been maligned, abused, or treated unfairly or unjustly, or who are victims of corporate oppression or freeze-outs or squeeze-outs is what we stand for at Lubin Austermuehle. We are vehemently against deception because our firm was founded on honesty, integrity, and trust more than 30 years ago. If you’ve been wronged, why not let us stand with you and work toward justice and just compensation? Our fraud flag flies high from Naperville and Oak Park to the North Shore and beyond.
Take advantage of our FREE consultation. We’ll discuss your legal issues and needs and our ability to meet (and exceed) your expectations. Call 833-305-4933 or contact us via our website by clicking here. We look forward to speaking with you.