Former Frank CEO Charlie Javice has been charged with defrauding JPMorgan Chase after the bank acquired her financial aid startup for $175 million in 2021. In a complaint filed on Tuesday, the Department of Justice accuses the fintech founder of “falsely and dramatically inflating” the number of clients her startup served to “fraudulently induce” JPMorgan Chase into acquiring the company.
The 31-year-old Javice, who was included in Forbes’ 30 under 30 list in 2019, created Frank in 2016 with the stated goal of simplifying the financial aid process for students and maximizing the amount of aid they received.
A list of 4.25 million users allegedly contains fewer than 300,000 real accounts
Javice later became a managing director at JPMorgan Chase following Frank’s acquisition and was allegedly set to receive over $45 million as a result of the sale.
Federal prosecutors are charging Javice with one count of conspiracy to commit bank and wire fraud, one count of wire fraud affecting a financial institution, and one count of bank fraud. While these three charges each carry a maximum sentence of 30 years behind bars, she’s also charged with securities fraud, which comes with a 20-year maximum sentence. Javice with arrested on Monday night and later released on a $2 million bond.
Earlier this year, JPMorgan Chase shut down Frank, filing a lawsuit against Javice and Frank executive Olivier Amar after allegedly realizing that most of the people on the startup’s list of users were fake. According to the bank’s suit, Javice hired a data scientist to fabricate a user data set with 4.25 million students, when, in actuality, the startup had less than 300,000 real users. Javice is also accused of purchasing a data set containing 4.5 million actual college students in an attempt to fill out Frank’s database following JPMorgan Chase’s acquisition. Javice has denied the allegations and is countersuing for reputational harm.
“As alleged, Javice engaged in a brazen scheme to defraud JPMC in the course of a $175 million acquisition deal,” US Attorney Damian Williams says in a statement. “She lied directly to JPMC and fabricated data to support those lies — all in order to make over $45 million from the sale of her company.”