Company:Frank

From HandWiki
Short description: American technology company

Frank is an American technology company that helped students find free scholarship money through an online college financial planning platform.[1] Launched in 2016 by 24-year-old Charlie Javice, the software guided students through the online FAFSA (Free Application for Federal Student Aid) application, helping them complete more than 100 questions within a few minutes.

Frank was acquired by JPMorgan Chase in September 2021 for $175 million. In December 2022, the bank sued Javice and another company executive for fraud, alleging that they vastly inflated the number of customers that the company actually had. The Frank website was shut down shortly after in January 2023.

History

Frank was founded in 2016 by Charlie Javice, a graduate from the Wharton School at the University of Pennsylvania. Javice, who was 24-years-old at the time, said her goal was to reduce student debt.[1][2][3][4] [5] The original website was frankfafsa.com; however, the term FAFSA was removed in 2018 following a settlement with the U.S. Department of Education who owns trademark rights to the acronym.[4]

In January 2018, Frank raised $10 million in funding from investors including Lemonade, WeWork, Bradley Tusk, and Marc Rowan, co-founder of Apollo Global Management.[6] At that time, Frank had 18 full-time employees in the United States and Israel.[1][6] Javice was named as one of Forbes' 30 Under 30[7][8] and Crain's New York's 40 under 40.[3]

Online platform

Frank's online tool simplified the FAFSA process, helping students fill out the application quickly.[1][9] In addition to filing their FASFA, students could also search for other scholarships and low-cost college courses.[9] The website was free to use, but students could pay for additional membership features such as access to Frank's financial support team and access to a cash advance: up to $5,000 to cover tuition and other college costs while they waited for their financial aid to be approved, with no interest.[1][10][11] Frank also helped students appeal financial aid decisions.[10]

In November 2020, the U.S. Federal Trade Commission issued a warning letter to Frank raising concerns that the “purported assistance to students consists primarily of providing a form letter that may lack the information a student would need to apply for one of the grants from his or her school.”[4][12]

JPMorgan Chase acquisition

Javice approached JPMorgan Chase in the summer of 2021 about a potential acquisition.[9] In September 2021, Frank was purchased by the bank for $175 million to deepen ties with college students as potential customers.[13][14][9][2][8][4] Javice remained CEO of Frank and joined JPMorgan Chase as head of student solutions on the digital products team.[2]

Fifteen Frank employees were brought on as part of the acquisition, from mid-level associates to executive level.[14] As part of the acquisition, Javice received more than $9 million directly in stock proceeds and a $20 million retention bonus.[15] [4]

Lawsuit

In December 2022, JPMorgan Chase sued Charlie Javice and Frank chief growth officer Olivier Amar for fraud, alleging that they lied to the bank by making up millions of fake student accounts to show that it had a successful, growing business.[9][13][16] The lawsuit was filed in a Delaware federal court.[9] According to the lawsuit, Javice claimed that Frank had 4.25 million users; in reality, the company had fewer than 300,000.[9][13][16] According to the lawsuit, Javice and Amar paid a data-science professor $18,000 to create a list of fake, user-generated names and addresses, in addition to purchasing a list of 4.5 million student names from a marketing firm.[9][13][16]

JPMorgan Chase claimed that it uncovered the fake user data when it launched an email-marketing campaign and more than 70% of the addresses that were allegedly Frank customers were not successfully delivered.[9][8] The U.S. Securities and Exchange Commission charged Javice with fraud, filed in U.S. District Court for the Southern District of New York.[15][16] Javice was arrested in April 2023 and has denied the allegations.[8][16][17]

In a counter lawsuit, Javice sued JPMorgan Chase for wrongful termination after the bank fired her in November 2022, alleging she was owed millions of dollars for expenses incurred while defending herself against internal investigations.[9][18][15][19] She also claimed the bank violated student privacy laws.[13] In May 2023, a Delaware court ordered JPMorgan Chase to cover Javice's legal fees.[20]

JPMorgan Chase shut down the Frank website in January 2023.[8][21]

In July 2023, Amar was charged with wire fraud, bank fraud, securities fraud, and conspiracy.[22]

References

  1. ↑ 1.0 1.1 1.2 1.3 1.4 Lansat, Myelle. "A 26-year-old founder has a solution to what Bill Gates calls an 'unnecessary roadblock' to college — and her startup is helping students get thousands off their tuition" (in en-US). https://www.businessinsider.com/frank-helps-students-file-fafsa-college-financial-aid-faster-2018-10. 
  2. ↑ 2.0 2.1 2.2 "JPMorgan Chase acquires college financial planning platform Frank" (in en). Reuters. 2021-09-21. https://www.reuters.com/business/finance/jpmorgan-chase-acquires-college-financial-planning-platform-frank-2021-09-21/. 
  3. ↑ 3.0 3.1 "40 Under 40 - Charlie Javice" (in en). 2019-03-19. https://www.crainsnewyork.com/awards/40-under-40-2019-charlie-javice. 
  4. ↑ 4.0 4.1 4.2 4.3 4.4 Lieber, Ron (2023-01-21). "How Charlie Javice Got JPMorgan to Pay $175 Million for … What Exactly?" (in en-US). The New York Times. ISSN 0362-4331. https://www.nytimes.com/2023/01/21/business/jpmorgan-chase-charlie-javice-fraud.html. 
  5. ↑ Elegant, Naomi. "This Wharton alum’s startup helps college students negotiate their financial aid packages" (in en-us). https://www.thedp.com/article/2018/01/frank-financial-aid-wharton-upenn-penn-philadelphia-startup. 
  6. ↑ 6.0 6.1 Shieber, Jonathan (2018-01-04). "TurboTax for student loan applications raises $10 million" (in en-US). https://techcrunch.com/2018/01/04/investors-are-pouring-money-into-frank-a-turbotax-for-student-loan-applications/. 
  7. ↑ "30 Under 30 2019: Finance" (in en). https://www.forbes.com/30-under-30/2019/finance//. 
  8. ↑ 8.0 8.1 8.2 8.3 8.4 Constantino, Annika Kim (2023-04-04). "Frank founder criminally charged with fraud over $175 million JPMorgan deal" (in en). https://www.cnbc.com/2023/04/04/frank-founder-charged-with-fraud-over-175-million-jpmorgan-deal.html. 
  9. ↑ 9.0 9.1 9.2 9.3 9.4 9.5 9.6 9.7 9.8 9.9 Korn, Melissa; Benoit, David (2023-01-11). "JPMorgan Bought College Financial-Aid Platform for $175 Million—and Now Says Most of Its Users Were Fake" (in en-US). Wall Street Journal. ISSN 0099-9660. https://www.wsj.com/articles/jpmorgan-bought-college-financial-aid-platform-for-175-millionand-now-says-most-of-its-users-were-fake-11673470572. 
  10. ↑ 10.0 10.1 "Tackling the Student Debt Problem Head-On" (in en-US). 2020-02-06. https://www.diversitywoman.com/tackling-the-student-debt-problem-head-on/. 
  11. ↑ Shieber, Jonathan (2018-01-04). "TurboTax for student loan applications raises $10 million" (in en-US). https://techcrunch.com/2018/01/04/investors-are-pouring-money-into-frank-a-turbotax-for-student-loan-applications/. 
  12. ↑ "FTC Warns Frank Financial Aid to Stop Potentially Misleading Marketing Directed to Students Seeking Coronavirus Financial Relief" (in en). 2020-11-16. https://www.ftc.gov/news-events/news/press-releases/2020/11/ftc-warns-frank-financial-aid-stop-potentially-misleading-marketing-directed-students-seeking. 
  13. ↑ 13.0 13.1 13.2 13.3 13.4 Feeley, Jef (2023-01-11). "JPMorgan Says It Was Defrauded in $175 Million Purchase of College Site" (in en). Bloomberg.com. https://www.bloomberg.com/news/articles/2023-01-11/jpmorgan-says-it-was-defrauded-in-175-million-frank-acquisition. 
  14. ↑ 14.0 14.1 Levine, Alexandra S.. "JP Morgan Is Still Cleaning Up Its ‘Disastrous’ $175M Frank Acquisition" (in en). https://www.forbes.com/sites/alexandralevine/2023/02/27/jp-morgan-charlie-javice-frank/. 
  15. ↑ 15.0 15.1 15.2 Azevedo, Mary Ann (2023-04-04). "SEC charges founder of financial aid startup Frank with defrauding JPMorgan" (in en-US). https://techcrunch.com/2023/04/04/sec-charges-founder-of-financial-aid-startup-frank-with-defrauding-jpmorgan/. 
  16. ↑ 16.0 16.1 16.2 16.3 16.4 Newsham, Katherine Long, Jack. "Frank founder Charlie Javice, who allegedly defrauded JPMorgan out of $175 million, hit with federal charges" (in en-US). https://www.businessinsider.com/charlie-javice-frank-criminal-charges-financial-fraud-jpmorgan-chase-2023-1. 
  17. ↑ "Frank founder Charlie Javice arrested, charged with defrauding JPMorgan Chase - CBS News" (in en-US). 2023-04-05. https://www.cbsnews.com/news/charlie-javice-criminal-charge-fraud-sec/. 
  18. ↑ Owen, Quinn (2023-04-08). "Former Forbes '30 Under 30' start-up CEO accused of $175M fraud scheme against JP Morgan Chase" (in en). https://abc7chicago.com/charlie-javice-frank-company-jp-morgan-chase-fraud/13103650/. 
  19. ↑ Benoit, David; Korn, Melissa (2023-02-27). "Frank Founder Says JPMorgan Knew How Many Users Firm Had in $175 Million Deal" (in en-US). Wall Street Journal. ISSN 0099-9660. https://www.wsj.com/articles/frank-founder-says-jpmorgan-knew-how-many-users-her-firm-had-in-175-million-deal-2b6f010d. 
  20. ↑ Miller, Joe; Franklin, Joshua (2023-05-08). "JPMorgan ordered to pay Frank founder’s legal fees in fraud case". Financial Times. https://www.ft.com/content/0f8f6317-6a48-4bd0-85f4-2f04f817c84f. 
  21. ↑ Son, Hugh (2023-01-12). "JPMorgan shutters website it paid $175 million for, accuses founder of inventing millions of accounts" (in en). https://www.cnbc.com/2023/01/12/jpmorgan-chase-shutters-student-financial-aid-website-frank.html. 
  22. ↑ https://www.nbcnews.com/news/crime-courts/second-frank-financial-aid-executive-charged-jpmorgan-fraud-case-rcna94564


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