Creator of startup 'Frank' faces fraud lawsuit after fooling JP Morgan

JP Morgan has announced that it will file a fraud lawsuit against Charlie Javice, founder of the startup Frank, which it acquired for $175 million. 

The platform - which aimed to help college students file financial aid forms and save on tuition - was founded in 2016 and was purchased by the U.S. bank in 2019. Frank was backed by big names in the industry at the time, and the app had 300,000 satisfied customers. 

Through JP Morgan's acquisition of the platform, Javice, 30, received about $10 million, which she later negotiated and raised to $20 million. In 2019, she was also named to the Forbes "30 Under 30" list for her success.

To close the sale of their startup, Javice and Olivier Amar, Frank's chief growth officer, said that from 300,000 customers in 2019, the app had grown to five million after its resale. However, when JP Morgan requested customer data for marketing purposes, the bank discovered that the company had artificially inflated its customer portfolio.

Upon investigation, it was discovered that Javice and her partner had given $18,000 to a New York-based data science professor to create 4.6 million fake accounts. They also spent $105,000 to purchase student data from ASL Marketing and had the accounts verified by a third-party vendor. 

Javice, who is Jewish, graduated from high school at the French-American School in New York and then joined the Wharton School at the University of Pennsylvania to pursue a Bachelor degree in Science in 2010, before studying finance and law. She also went through the University of Tel-Aviv. During her time at Wharton, Javice in 2010 founded a startup called PoverUP that aimed to bring together students, professionals and scholars to learn online.

Back in 2018, an Israeli co-founder of Frank, Adi Omesy, sued Javice over wage theft in Israel, forcing her to pay compensation. Nevertheless, she continued to establish startups, receiving broad coverage in U.S. media, including positive articles in Forbes and Business Insider. 

Javice is just one of several startup founders, who have recently been accused of fraud. Another Forbes' "30 Under 30" tech prodigy Sam Bankman-Fried, is currently awaiting trial after the collapse of his crypto exchange FTX.