In New York, a founder of a promising startup, Charlie Javice, was recently found guilty of a significant fraud case against JPMorgan Chase, one of the largest banks globally. Javice, who once touted Frank as a revolutionary platform for streamlining college financial aid applications, was convicted of inflating her customer base to deceive the bank into a $175 million acquisition deal. The trial, which lasted five weeks, held in a Manhattan federal court, ended with Javice, 32, and her associate Olivier Amar, potentially facing lengthy prison sentences.
During the court proceedings, Javice did not engage with reporters and left the court quietly. Her company, Frank, was designed to simplify the complicated Free Application for Federal Student Aid (FAFSA) process, catering specifically to students in financial need for a few hundred dollars in fees. Javice had gained a measure of prominence through media appearances, even making it to Forbes’ “30 Under 30” list prior to JPMorgan’s acquisition in 2021.
Executives from JPMorgan testified that Javice, leveraging her charisma, claimed she had a client base exceeding four million, with projections to reach 10 million by year’s end. However, they found that the true customer count was only around 300,000, and the data supporting her claims was largely fabricated. Javice’s defense lawyer, Jose Baez, contested that JPMorgan was aware of what it was acquiring and argued that the fraud accusations were a result of the bank’s dissatisfaction after discovering the data was less valuable under new regulations.
Efforts are underway by Javice’s legal team to overturn the verdict, claiming insufficient evidence. Meanwhile, Judge Alvin K. Hellerstein is scheduled to hear additional arguments concerning the potential use of ankle monitors for Javice and Amar as they await sentencing in July, a contention raised by Javice due to her teaching Pilates classes routinely.
Since her arrest in 2023, Javice, who resides in Florida, has been on $2 million bail. Alongside Amar, Frank’s principal growth strategist, she was convicted on all counts, including conspiracy, bank fraud, and wire fraud charges, each carrying penalties of up to 30 years in prison. Acting Manhattan U.S. Attorney Matthew Podolsky remarked that their deceptive tactics had caught up to them eventually.
The journey of Javice mirrors other tech entrepreneurs who have faced scrutiny over the veracity of their claims concerning their supposedly innovative businesses. Inspired originally by her challenges with the financial aid system and her vision upon graduating from Wharton’s prestigious business school, Frank was created to eliminate difficulties in the application process using software akin to tax preparation tools. Investors, including venture capitalists like Michael Eisenberg, backed the concept for its potential efficiency and student aid maximization.
Envisioning the opportunity to gain numerous young clients, JPMorgan was drawn to Frank due to its advertised colossal client base. However, post-acquisition, the bank purportedly uncovered Javice’s deceit about the startup’s performance. Testimony from Frank’s software engineer, Patrick Vovor, revealed that Javice solicited him to generate fake data to substantiate her inflated user numbers. Despite assurances from Javice and Amar about its legality and expressions of disdain for the prospect of imprisonment, Vovor declined, fearing illegality.
The defense attempted to undermine Vovor’s testimony by suggesting a personal motive rooted in Javice’s disinterest in him romantically, which Vovor denied. Prosecutors argued that Javice paid a college acquaintance to fabricate fake user data, subsequently sending it to JPMorgan’s data verifier. Allegedly, this verifier did not confirm the data’s authenticity. Despite the unfolding drama, Javice’s attorney insisted that JPMorgan was aware of the overstated figures throughout the acquisition.