Frank

Chez Guevara — Dining in style at the Disaster Café™ →Go uptown Extract from the JC’s financial disasters roll of honour Scandal Date Where Loss Reason Firings Jail-Time? Frank 2023 US $175m Fraud, unfeasible gullibility Javice got fired. Surely more to come Not yet clear edit template Index: Click ᐅ to expand: Disaster Café Tell me more Sign up for our newsletter — or just get in touch: for ½ a weekly 🍺 you get to consult JC. Ask about it here.

What happened, according to JP Morgan’s own complaint.

The start-up business

• In 2017, Charlie Javice, a photogenic 24 year-old founded “Frank”, an online tool to help students apply for federal student aid.
• It is not clear how Frank proposed to make money from this, but okay.
• By early 2021 Frank was publicly claiming to have helped millions of students obtain billion dollars of loans (emphasis JP Morgan’s).

Enter the house of Morgan

• In July 2021 Javice tried to flog the business to JPMorgan, claiming to have 4.25 million “users”, who had created an account on Frank’s website with a first and last name, email address and phone number.
• This appears to have been a bare-faced lie. JP Morgan called her bluff.

Due dilly and the dodgy dossier

• As part of its “critical confirmatory due diligence”, on 1 August 2021 JPM asked to see the account data.
• Frank engaged an as yet unnamed data science professor, whom we will call the “dodgy data science professor” for reasons that will become obvious, to make up some plausible sounding data, using “synthetic data techniques”.
• Memorable quote from JP Morgan:

“Synthetic data, in plain English, is fake information.”

• Frank paid the dodgy data science professor $18,000 for his trouble, first unilaterally doubling his hourly rate, then adding $4,500 to his bill to persuade him to be discrete on his invoice.
• Frank’s Chief Growth Officer Olivier Amar simultaneously bought a list of 4.5m actual high school students, college students and young people from a marketing firm for $105,000.

• On Thursday 5 August 2021, Frank agreed to share some data (but, citing privacy compliance) with email and physical addresses substituted for unique identifiers) with a third party vendor to validate it. Another memorable JP Morgan quote from the complaint:

“The Fake Customer List had no value as diligence information. It did not tell JMPC anything about Frank, its business, or the students who supposedly started filling out FAFSAs”.

The deal closes

• Yet JP Morgan went ahead all the same.
• On Sunday August 8, JPMorgan acquired Frank for $175m, hiring Javice, Amar and other Frank staff as employees to run the business. The deal closed in September.

About that customer list

• In January 2022, to test the quality of the customer list, JPMC asked Javice to send the list to the JPMC client outreach team. Javice sent botch up of the actual young people data list they bought.
• JPMC reached out via email to a random sample of around 400,000 emails on the list list Frank provided of these only 103 recipients even clicked through to Frank’s. Another memorable quote from JP Morgan:

The marketing campaign was a disaster.

• In June 2022 JPMC investigated, found emails attesting to all the above from their now employees, fired them and shut down Frank.

Blaze of lawsuits

And there might it have ended, had Javice not sued JP Morgan, in December 2022, alleging the bank used its investigation into Frank as an excuse to fire her from her job with the company. Rather than stoically, and quietly, defending this patently frivolous action, JP Morgan countersued for its acquisition cost, and as a result the world’s media with an embarrassing take of witlessness, all around, for what is in JP Morgan’s scheme of things a paltry sum.

Belief Suspenders

Tough one. Javice has great hair and sparkly blue eyes? Young millennial? Instagrams well? Made it to the Forbes “30 under 30 lis”t?

Oh, come on ref

2

Captive advisors

Nope, apparently none.

This time it’s different

Kinda maybe you could say this is the young creatively uising the world wide web in a productive way, but no bitcoin, AI or DLT or anything like that.

Hiding in plain sight

Charlie Javice was pretty? Does that count?

Any ... actual money?

No actual money. Just a mailing list. That they made up!

Control defeat devices

Federal Trade Commission warned student aid platform Frank that it "may be unlawfully misleading consumers" about student COVID relief.

Settled allegations of misrepresenting its ties to the Department of Education.

See also

• JP Morgan Complaint