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- Startup founder learns fate in enormous JPMorgan Chase fraud scheme (foxbusiness.com)
Frank Founder Sentenced to Over Seven Years for Defrauding JPMorgan Chase
New York, NY – Charlie Javice, the founder of the student loan startup Frank, was sentenced Monday to more than seven years in federal prison for defrauding JPMorgan Chase out of millions of dollars by fabricating user data. The ruling comes after her conviction on bank, securities, and wire fraud, as well as conspiracy charges in March.
U.S. District Judge Alvin Hellerstein, presiding in Manhattan federal court, handed down an 85-month prison sentence, which translates to seven years and one month. This will be followed by three years of supervised release.
Prosecutors revealed that Javice, 33, deceived JPMorgan Chase into acquiring her company by falsely inflating its student user numbers. The banking giant purchased Frank for $175 million in 2021, with CEO Jamie Dimon reportedly involved in the negotiations.
Beyond the prison term, Javice has been ordered to forfeit $22 million in salary, stock, and bonuses linked to the sale. She must also jointly pay $287.5 million in restitution with her co-defendant, Olivier Amar, Frank’s former chief growth officer.
Frank, founded in 2017 when Javice was in her mid-twenties, was promoted as a revolutionary platform designed to simplify federal financial aid processes for college students and their parents. The startup garnered significant attention, earning Javice a spot on Forbes’ “30 Under 30” list and attracting the interest of JPMorgan Chase.
However, investigators found that the company’s success was built on a foundation of lies. While Javice claimed Frank boasted over 4 million active users, the actual number was closer to 300,000. To support these inflated figures, Javice allegedly collaborated with a college professor to fabricate user data and purchased names from commercial data brokers.
The deception unraveled when JPMorgan Chase attempted to contact Frank’s supposed vast customer base following the acquisition, revealing the significant disparity in numbers. Prosecutors described the bank as having “acquired a crime scene,” with JPMorgan CEO Jamie Dimon later publicly calling the purchase a “huge mistake.”
During her sentencing, Javice stated, “I accept the jury’s verdict and take full responsibility.” Her defense team sought leniency, citing her history of good deeds and personal struggles, arguing the fraud was an isolated mistake.
Judge Hellerstein, however, emphasized the premeditated nature of the crime, stating, “Your crimes required a great deal of duplicity.” While acknowledging Javice as a “good person who has done good deeds,” the judge underscored the necessity of deterrence for others.
Javice, a graduate of the University of Pennsylvania’s Wharton School of Business, plans to appeal her conviction. She will be required to report to prison once the appeal process concludes.
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- Startup founder learns fate in enormous JPMorgan Chase fraud scheme (foxbusiness.com)