- Charlie Javice was found guilty of defrauding JPMorgan Chase out of $175 million. She was guilty of lying about the size of her customer base when selling her startup, Frank, which aimed to simplify FAFSA applications for college students.
- Javice falsely claimed that her company had millions of customers, when in reality, there were only about 300,000.
- Javice faces up to 30 years in prison.
Full Story
Charlie Javice, who launched a start up in 2017, claiming she was revolutionizing the way college students applied for financial aid, was convicted Friday, March 28, of defrauding JPMorgan Chase out of $175 million by lying about the size of her customer base.
Javice, 32, was found guilty by a jury in New York City, which returned its verdict after a five-week trial.
In 2017, Javice started Frank, a company that promised to simply the process of filling out the Free Application for Federal Student Aid (FAFSA).
Soon after starting her business, she gained notoriety, appearing regularly on news programs and landing a spot on Forbes’s “30 Under 30” list.
In 2021, JPMorgan bought her startup for $175 million. However, after the deal closed, JPMorgan filed a lawsuit claiming that Javice’s story was fabricated.
She was indicted in 2023 on charges of securities fraud, wire fraud, bank fraud and conspiracy.
What fraud allegations were brought against Javice?
During the trial, JPMorgan executives said she told them she had more than four million clients and would have about 10 million by year’s end, but it turned out there were only about 300,000 customers.
Javice’s lawyer, Jose Baez, told the jury that JPMorgan knew what it was getting in the deal, and made up the fraud allegations due to buyer’s remorse after government regulatory changes made the data it received in the deal useless to its hopes of gaining new young customers.
Frank’s chief of engineering, Patrick Vovor, testified at the trial that Javice had asked him to generate synthetic data to support her claim that the company had over four million users after JPMorgan insisted on verification of the customers.
Vovor said he refused her request.
Prosecutors said Javice then paid a college friend $18,000 to use a computer program to create millions of fake names with pedigree information.
According to testimony, the results were sent to a third-party data provider that JPMorgan hired to verify the number of customers, but the data provider never checked to ensure the people were real.
What happens next?
Javice could face a maximum of 30 years in prison on the charges of wire fraud, bank fraud and conspiracy.
Securities fraud carries a slightly lower maximum sentence of 20 years.
The judge scheduled Javice’s sentencing for August 26.