The young founder accused of conning JPMorgan in $US175m deal

By promising to help users file financial aid forms more quickly and easily — and deliver billions in savings to teenagers who needed help — her business plan had the halo of doing well while doing good. It eventually added a dot-org web address for good measure.

“I thought it would be an advocacy organisation,” said Carly Gillis, who was Frank’s director of content and community for several months in 2018. “A real David and Goliath story.”

Javice’s story is an archetypal tale of late-stage startup hustle culture — a teenage prodigy turned Ivy League social enterprise maven and shape-shifting saviour of higher education.

Or so she would have the world believe.

100 most creative people

Javice’s career helping others began, in her telling, on the border of Thailand and Myanmar. She spent time volunteering there between terms at her private high school in Westchester County, New York.

The work helped inspire her to create PoverUp, an organisation that promoted microfinance and helped other students learn about reducing poverty through business. About 50 schools were joining her network every month or month and a half, she said on a podcast in 2011.

Javice has said she needed help herself while she was an undergraduate at the Wharton School at the University of Pennsylvania, where she quickly drew notice by appearing on Fast Company’s 2011 list of the 100 most creative people in business.

There, she was on financial aid, and she found the forms confusing. So did her parents, according to an interview she gave to Diversity Woman magazine — including her father, Didier, who has worked on Wall Street for more than 35 years, with 11 years at Goldman Sachs and three at Merrill Lynch, according to his LinkedIn profile. Javice, her father and her mother, Natalie Rosin, did not respond to questions about how Javice had qualified for financial aid and the struggles to obtain it.

According to state legal filings, Javice incorporated her first company, TAPD, in 2013. There is no mention of it on her LinkedIn page, but she has spoken about this pre-Frank startup in the past.

In a now-deleted interview on Medium from 2020, she spoke of the attempt at TAPD to come up with a better way to judge the creditworthiness of people just getting started in life.

Credit scoring involves complex state and federal regulations, and after 18 months, Javice realised that building a new system and complying with the rules would be too expensive. “I fired all my employees,” she said in the Medium interview. “It was the worst thing I’ve ever had to do. A lot of my employees were close friends and still won’t talk with me to this day.”

From all of this struggle, another startup was born. In 2016, a message appeared on frankfafsa.com promising “Maximum financial aid, guaranteed,” and adding: “If we don’t save you at least $US1,000 of tuition, we’ll refund you. Go Premium for $US10/month. Cancel anytime.” At the bottom was an invitation to join a waitlist.

Behind the scenes, the US Department of Education had quickly taken notice. It was not pleased. FAFSA, which stands for Free Application for Federal Student Aid, is a registered trademark, and the department didn’t take kindly to Frank’s use of it.

In a 2018 settlement agreement, which a financial-aid expert, Mark Kantrowitz, unearthed via a Freedom of Information Act request, Frank agreed to hand its frankfasa.com web address over to the department.

All along, Javice was making frequent media appearances. In December 2017, she wrote an opinion piece for The New York Times with the headline “The 8 Most Confusing Things About FAFSA.” The piece contained so many errors that it required an eight-sentence correction.

Nevertheless, over the next two years, publications continued to shower praise on her. A Business Insider article from October 2018 that appeared on Yahoo Finance had a headline proclaiming, “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.”

’30 under 30′

List accolades turned up in bunches. Javice appeared on the 2019 Forbes 30 Under 30 finance list. Then she made the Crain’s New York Business 40 Under 40 list. “Javice has done her homework,” the Crain’s article said.

Not everyone agreed. The next year, Wesley Whistle, who worked at the New America think tank at the time, wrote a blog post calling out Frank and Javice for promising help with pandemic relief for students, even though Frank wasn’t working with schools directly and the company’s tool might not have been of any use to many students.

Not long after that, the Federal Trade Commission sent a warning letter to Frank noting that its “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.”

The company made a big push to add online courses to its offerings. That was a key element of a November 2019 investor presentation, stamped “Draft & Confidential,” a copy of which was reviewed by the Times. “Students spend $US400 billion on tuition, and ethically serving this market gives us access to extraordinary opportunity,” the presentation said.

According to the investor presentation, the pipeline of schools wanting to do business with Frank was “exploding.” There were no school names in the slide deck; a small footnote in a hard-to-read colour said the company was precluded from providing “partner” names. References, however, were available upon request.

Competitors and financial aid experts were watching all of this with increasingly arched eyebrows. But they were shocked when JPMorgan announced in September 2021 that it was acquiring Frank.

“Today is my first day employed by someone else, ever,” Javice told CNBC after the announcement. “I mean, it still feels very much like, pinch me, did this really happen?”

Observers didn’t believe it had really happened. Mark Salisbury, co-founder of TuitionFit, a service that helps families research the true price of college using real financial aid awards from other students, did some math on his late competitor.

Salisbury, a former director of institutional research and assessment at Augustana College, estimates that 2 million students start college each year. Having done the FAFSA the first year, he figured, most families wouldn’t seek help from a company such as Frank in subsequent years. So if Frank had served 5 million people in just a half-decade, it would have captured a sizable share of new college students who needed financial aid.

Reaching all of those people within the year that they might seek help, however, isn’t easy. “To break through all of the noise on the internet, that is incredibly difficult to do, and it costs an insane amount of money to pull it off,” Salisbury said.

The promise unfulfilled

So what could JPMorgan have seen in the company?

Clearly, it liked Javice. In fact, the bank planned to pay her a $US20 million retention fee if she stuck around for a stretch of time after the merger closed.

If JPMorgan wanted a pipeline of soon-to-be-educated young adults, it was paying $US35 per name — $US175 million divided by those 5 million customers. To pay that much, it had to have a lot of confidence that its marketing team would be able to persuade Frank customers to do business with the bank and stick with it for decades.

Soon after the merger closed, the bank took its shot and sprayed a portion of Frank’s customer list with solicitations. Of 400,000 outbound emails, only 28 per cent arrived successfully in an inbox, compared with the usual 99 per cent delivery rate. Moreover, just 103 recipients clicked a link to Frank’s website. It was, as the bank put it in its legal filing, “disastrous.”

An investigation ensued, and the bank dived into Javice’s Frank email account. There, it found a litigation mother lode. The messages, according to the bank, included copious evidence that she had hired a data-science professor to create fake information to prove to the bank that the millions of customers that Frank claimed to have were real.

Highlights from the emails also included a Frank engineer’s questioning of Javice’s data manipulation request. She responded that she didn’t think anyone would end up in an “orange jumpsuit” over it, according to JPMorgan’s complaint against Javice and Amar.

JPMorgan is not buying Javice’s privacy argument. The bank’s CEO, Jamie Dimon, called the Frank acquisition a “huge mistake” on a January 13 quarterly earnings call. That week, it also shut down Frank’s website and erased the news release announcing the deal from its own website.

“There are always lessons; we always will make mistakes,” Dimon said on CNBC on Thursday. “I tell our people, we make mistakes, it’s OK, and when we know what all the lessons are, I’ll tell you what they were.”

None of Frank’s investors or the people Javice has named as mentors returned messages or would comment on her behalf, and she did not offer up names of people to call. But one of them did offer a comment through a spokesperson.

In a 2018 interview in PopSugar, Javice described Bobby Turner, founder of an investment firm, as “one of the most impactful people in my life so far.” When she was having a hard time, she told the publication, Turner, who was an investor in Frank, would make her promise to do three things every day.

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“And he’s literally like, ‘Well, you need to meditate, go to the gym and have sex,’” she said in the interview.

Randy James, a spokesperson for Turner, said he had been a major benefactor of Wharton’s social impact programs and served as a mentor to many students and alumni, including Javice. “Bobby shared his views on a number of topics related to business and work-life balance, though he did not make the comments she attributed to him in a 2018 interview,” James said.

“The allegations against Ms. Javice regarding Frank are troubling,” he added, “and if true, would represent a serious breach of trust and violation of the law.”