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Charlie Javice, a 30-year-old businessman who is being sued by JPMorgan after the bank bought his education startup, claims boss Jamie Dimon knew how big his company was before going through with the deal and that the claims of fraud are unfounded.
JPMorgan, the largest US bank by assets, paid the $175 million for Frank in September 2021 in a bid to deepen its ties to the students.
The bank said it was led to believe that more than 4.25 million students had created accounts at Frank.
However, when JPMorgan sent test marketing emails to a list of Frank’s clients that the company had provided, only 28% of them were delivered, the bank alleged.
JPMorgan said it typically sees a 99% delivery rate with similar campaigns and now accuses Javice of “misleading” the bank with a list of bogus customer names.
Charlie Javice, 30, who is being sued by JPMorgan after they acquired his education startup for $175 million, has denied the bank’s fraud allegations.
Javice claims that Jamie Dimon, CEO of JPMorgan, was aware of the size of his company before going ahead with the deal.
JPMorgan fired Javice last November and then sued her in a US district court in Delaware the following month.
Javice and another company executive, Olivier Amar, allegedly paid a data scientist $18,000 to create a fake client list to inflate Frank’s real size when his own employee refused, a lawsuit alleges.
Javice accuses the bank of trying to frame her for a failed strategy in a lawsuit filed in federal court in December.
Javice denies making up the 4 million names that are said to have been made up using artificial intelligence, and is instead countersuing the bank for $28 million in compensation that she says is owed to her following the bank’s withdrawal.
She insists that the bank’s chief executive, Jamie Dimon, was eager to buy her company.
The bank alleges that Javice and another executive, Olivier Amar, pictured here, paid a data scientist $18,000 to create a fake client list to inflate Frank’s real size.
Charlie Javice, 30, says the bank has possibly tarnished his reputation for life.
Dimon told Javice in a meeting before the deal that he believed his team should “close the deal”. He has since described the deal as “a big mistake.”
Javice says the bank may have tarnished his reputation for life.
‘JPMorgan paid $175 million for what it believed was a business deeply committed to the college-age market segment with 4.265 million customers; instead, it received a business with fewer than 300,000 customers,’ the bank said in the lawsuit filed last month.
However, a lawyer for Javice has denied the accusations.
“After JPM rushed to acquire (Javice’s) rocket business, JPM realized it could not circumvent existing student privacy laws, engaged in misconduct and then tried to renegotiate the deal,” it said. Javice’s lawyer in January, adding that the bank’s lawsuit was “nothing.” but a cover.
“We stand behind our allegations and this dispute will be resolved through the legal process,” a bank spokesman told the bank on Monday. W.S.J.
Javice, the daughter of a successful New York-based investment manager, bought a Miami Beach apartment in May 2021 for just under $1.5 million, according to Miami-Dade property records.
Started by Frank a few years after graduating from Wharton business school, he revealed during an interview about his business success with a former tutor, which the school uploaded to his YouTube channel.
In his initial defense, Javice did not dispute that fewer than 500,000 people used Frank to fill out financial aid forms.
He said he had briefed JPMorgan executives on this during meetings before the acquisition, and clarified that most of the nearly 4.3 million users were people who came to the website to read financial aid articles or trusted Frank to to help them understand the college financing process. .
Javice bought an apartment in this Miami Beach complex in May 2021, according to Miami-Dade property records.
In the lawsuit, JPMorgan said Javice told the company a “lie” that more than four million users had signed up to use the tool.
After the bank asked for proof of that claim while conducting due diligence, she and Amar allegedly fabricated a database of fictitious student names, addresses, schools and dates of birth.
The data suggested that Frank had about 4,265,000 customer accounts; in fact, less than 300,000 of them were legitimate, it is claimed.
The bank says the scheme was undone when it tried to send emails to those users and 70 percent of its emails bounced.
Javice refuted the charge that he had created a fabricated list of users to mislead the bank. Instead, he claimed that JPMorgan had requested a “synthetic user data set” reflecting Frank’s real clients as a way to audit its users and avoid privacy concerns by not sharing their real names.
It claimed that JPMorgan knew that the user number it 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 clients it had based on other metrics in its proposal, such as its total marketing expenses.
He informed the bank that he spent about $5 per customer on marketing costs and that he had spent a total of $2.25 million on marketing.
Javice contended that JPMorgan’s allegations were an effort to hide its own wrongdoing, which included a scheme to profit from information about previous Free Application for Federal Student Aid (Fafsa) applicants, which would have violated federal regulations.
He claimed the bank was struggling after discovering new restrictions on how Fafsa forms could be submitted last summer, which would have limited Frank’s ability to submit applications on behalf of students.
Javice earned $10 million as part of the merger with JPMorgan, with a $20 million bonus at a later date. Amar made $5 million on the deal, with a similar bonus of $3 million.