Charlie Javice, the 31-year-old founder of the fintech startup Frank, has been sentenced to seven years in prison for defrauding JPMorgan Chase.
The financial giant acquired her company for $175 million, only to later understand that the customer base Frank claimed to have was drastically inflated.
Who is Charlie Javice?
A native of Westchester County, New York, Javice was a star student at the Wharton School of the University of Pennsylvania, graduating in 2013 with a degree in finance and legal studies.
During her time at Wharton, she launched PowerUp, an online platform designed to help students engage with micro-finance clubs. Her entrepreneurial spirit did not stop there.
Javice went on to found Frank in 2016, a financial aid startup aimed at simplifying the FAFSA application process and helping students navigate financial aid.
Her company quickly garnered attention in the fintech space, and in 2021, Frank was acquired by JPMorgan Chase for a reported $175 million.
Javice was appointed as a managing director at JPMorgan, overseeing student-focused products. She was celebrated as an up-and-coming business leader, earning a spot on Forbes’ 30 Under 30 list in 2022.
Fraud behind JPMorgan Chase acquisition
Javice’s downfall began when JPMorgan Chase acquired Frank in 2021. The bank had hoped to tap into the startup’s vast user base of students seeking financial aid.
However, it soon became clear that the customer base wasn’t what Javice had led JPMorgan to believe. She had claimed that Frank had 4 million customers, but in reality, the company only had 300,000.
This massive discrepancy raised red flags, leading JPMorgan Chase to sue Javice and accuse her of fabricating user data.
The prosecution’s case was further backed by testimony from former Frank employees, including engineer Patrick Vovor, who stated that Javice had asked him to create fake user data prior to the sale.
When Vovor refused, Javice turned to math professor and data scientist Adam Kapelner, who helped create synthetic user data. Kapelner’s testimony was key to the prosecution’s case and ultimately led to Javice’s conviction.
Along with her co-defendant, Olivier Amar, Frank’s chief growth officer, Javice was ordered to pay $278.5 million in restitution to JPMorgan Chase. Both are now facing severe legal consequences for their roles in the fraudulent scheme.
Judge Hellerstein, who presided over the case, noted that the fraud was particularly egregious because it had “captured Wall Street’s attention,” deceiving one of the largest financial institutions in the world.
During the sentencing, Javice expressed remorse for her actions, saying, “At 28, I did something that goes against the grain of my upbringing. Not a day goes by that I do not feel profound remorse. I am deeply sorry, and I am asking with all my heart for forgiveness.” But for many, the damage has already been done.
Javice’s history of legal disputes
In 2017, US Department of Education investigated Frank for potentially misleading customers into believing the company was affiliated with the government. The matter was settled in 2018, with Frank rebranding its website from frankfafsa.com to frank.com.
Additionally, Javice faced legal issues related to wage disputes with a co-founder in Israel, resulting in a $35,000 payment order in 2021.
Despite these earlier legal issues, Javice was still able to gain recognition in the business world, appearing on Forbes’ 30 Under 30 list in November 2022. Javice’s name was also added to Forbes’ Hall of Shame.