JPMorgan claims numbers were inflated in alleged $175M 'scam'

by Bob Van Voris and Jazper Lu

A senior JPMorgan Chase & Co. executive testified that Charlie Javice told the bank that her student-finance startup, Frank, was on track to more than double its users to nearly 10 million by the end of 2021, from a number prosecutors allege was already a scam.

Leslie Wims Morris, who was JPMorgan’s then-chief of corporate development, on Wednesday became the first witness from the bank to take the stand at Javice’s fraud trial. Wims Morris led deal negotiations with Javice, who is charged with inflating the number of Frank users from fewer than 300,000 to more than 4.25 million to persuade JPMorgan to acquire the company for $175 million.

Wims Morris, who is now chief executive officer of JPMorgan’s automotive loan unit, recalled that she was “very, very impressed” with the 29-year-old Javice when they first met on a July 2021 Zoom call.

“She was very knowledgeable, very articulate and very engaging,” Wims Morris testified in Manhattan federal court. The executive said she was struck by Javice’s growth projections and believed that buying Frank would allow JPMorgan to quickly add millions of young and lower-income banking customers.

Javice, now 32, is on trial with Olivier Amar, Frank’s former chief growth officer. Both have pleaded not guilty to defrauding JPMorgan, including by hiring a data scientist to fake user emails. They have suggested in court filings that the bank rushed due diligence and was more interested in Frank’s technological platform than its number of users.

Wims Morris testified that Frank’s user numbers were very important to JPMorgan. “We were squarely focused” on increasing the bank’s share of customers in the 18-to-24 age demographic, she said. “The number of users is core to that.”

Project Finland

Frank, which is now shuttered, offered a free tool to help students fill out their Free Application for Federal Student Aid, or FAFSA, which is required by most colleges in making financial aid decisions.

According to Wims Morris, Javice also stressed Frank users in the deal, saying the site’s value lay in the trusted relationships it had developed with students and other low-income people by helping them negotiate what was often their first big financial transaction. Javice claimed that 70% of Frank’s customers were under 24, the witness said.

Wims Morris, who will return to the stand Thursday, also said “nearly 350 people” at JPMorgan worked on due diligence for the Frank acquisition, which was known internally as Project Finland and closed in September 2021.

Javice started Frank in 2017 and was named to Forbes’s “30 Under 30” list of promising young talents two years later. The former rising star was later moved to the magazine’s “Hall of Shame,” a list of “30 Under 30” picks it wished it could do over. 

The most serious charge against Javice and Amar, bank fraud, carries a maximum penalty of 30 years in prison. 

The case is US v Javice, 23-cr-00251, US District Court, Southern District of New York (Manhattan).