Did a Financial Aid Startup Defraud JPMorgan Chase?

Frank was acquired in 2021 for $175 million

JP Morgan Chase
The founder of a startup acquired by JPMorgan Chase is coming under a lot of scrutiny.
Erik McGregor/LightRocket via Getty Images

When looking back over the tech boom, it seems all too likely that the phrase “too good to be true” will find its way into the conversation plenty of times. From health startups with seemingly miraculous devices to exclusive music festivals, the archives are full of ambitious founders who made big promises and came under both ethical and legal scrutiny for their actions.

The latest such case comes in the form of a startup that promised to revolutionize financial aid — and wound up with its founder facing fraud charges. An investigation at Air Mail explores the case of Charlie Javice, founder of the startup Frank. JPMorgan Chase acquired Frank in 2021 for $175 million — and things went very badly soon thereafter.

As Tarpley Hitt writes at Air Mail, Javice has been targeted with both a lawsuit from JPMorgan Chase and an arrest under suspicion of wire fraud. At issue seems to be whether Javice knowingly defrauded the financial institution that purchased the startup she founded or whether changes made to the government’s financial aid programs made Frank’s tools obsolete.

Air Mail cites a New York Times opinion piece that Javice wrote in 2017 as a potential red flag for the events that followed. Well, it’s less about the piece itself and more about the massive correction that the Times added about two months later. The Times‘s correction notes that the article initially misrepresented information about “the criteria needed to be considered an independent student,” “the treatment of 529 college savings plans” and multiple questions on the FAFSA form.

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There’s a lot more there, including details about shell companies and falsified lists of users. Will this be the next big-ticket fraud case involving a startup to get the prestige miniseries treatment? Keep an eye on your streaming service of choice.

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