Charlie Javice found guilty of defrauding JPMorgan Chase

Charlie Javice, the former Forbes “30 Under 30” founder, was convicted Friday of defrauding JPMorgan Chase of $175 million.

Javice sold her student-aid startup, Frank, to JPMorgan in 2021. Two years later, the bank accused her of creating fake profiles to boost the number of customers.

Prosecutors alleged over a six-week trial that Javice and co-defendant Olivier Amar, former Frank chief growth officer, fabricated customer data to falsely inflate Frank’s value prior to the sale, reporting the startup had 4.2 million customers when the actual number was closer to 300,000.

A federal court found Javice guilty on three counts of fraud and one count of conspiracy to commit fraud. The jury deliberated for about six hours.

The conviction carries the possibility of up to three decades in prison; the judge scheduled sentencing for late July. Amar was also found guilty Friday on all counts.

Frank was founded in 2017 as a fintech to alleviate the financial aid process for college students. It offered a tool to help college students fill out the Free Application for Federal Student Aid (FAFSA), which is used by most colleges to determine the amount of financial aid a student receives. Javice, now 32, launched the startup after graduating from the University of Pennsylvania’s Wharton School of Business.

During the trial, lead prosecutor Rushmi Bhaskaran said Javice worked to acquire fake names and addresses to bolster the company’s numbers in order to pass JPMorgan’s due diligence requirements. Bhaskaran also alleged Amar purchased fabricated student data from third parties to further boost the standings.

“It was through their lies that they became multimillionaires,” Bhaskaran said in the prosecution’s opening statement.

JPMorgan uncovered the ruse after the deal was finalized and the bank began marketing to Frank’s customer base. The initial emails received far fewer responses than expected.

JPMorgan claims 70% of the 400,000 marketing emails it sent to Frank’s alleged customers bounced. A bank executive testified at trial that JPMorgan only opened 10 accounts based on the emails sent to Frank customers, the New York Times reported.

Javice’s lawyers throughout the trial argued the bank was aware of the actual numbers before completing the deal. Javice’s attorney Jose Baez said in his opening statement that the lawsuit is “nothing more than buyer’s remorse.” Baez claimed that JPMorgan only changed its mind about the deal after financial-aid regulations changed a year after the acquisition.

Her attorneys also issued several motions throughout the trial calling for the charges to be dismissed and asking for the judge to declare a mistrial. One of their arguments was that Javice was having to beat back allegations from both the prosecution and her co-defendant Amar, whose lawyers argued had also been duped by Javice.

Even before its acquisition by JPMorgan, Frank was under scrutiny. The Department of Education in 2017 accused the company of misleading customers to believe it was associated with the department due to its original URL of frankfafsa.com. As part of the 2018 settlement, the website dropped FAFSA from its address.