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JPMorgan bought her startup for $175 million. Now she's accused of 'brazen fraud'
Charlie Javice faces charges of fraud after allegedly inflating her startup's user base to sell it to JPMorgan Chase for $175 million.
Charlie Javice engaged in “brazen fraud” by inflating user numbers to sell her startup to JPMorgan Chase for $175 million, a federal prosecutor argued during closing statements at her trial in New York. Javice stands accused of tricking JPMorgan into buying her student-finance startup, Frank, by dramatically exaggerating its customer base.
Prosecutors say that Javice lied to JPMorgan Chase about her startup having more than 4 million users. In reality, the number was closer to 300,000.
Assistant US Attorney Nicholas Chiuchiolo urged a Manhattan federal jury to convict Charlie Javice and a former top executive of her startup on charges of conspiracy and fraud.
Javice's lawyer, on the other hand, urged the jury to acquit his 32-year-old client, calling the case against her “incredibly flawed.” He also cited a lack of evidence.
Javice and her startup
Charlie Javice is a University of Pennsylvania graduate who built Frank when she was in her mid-20s. She appeared on the Forbes ‘30 Under 30’ list in 2019.
According to the Associated Press, Frank was created to simplify filling out the Free Application for Federal Student Aid, a complex government form used by students to apply for financial aid for college or graduate school.
Javice was widely praised for creating a platform designed to help financially struggling students navigate complex tuition aid rules. The company was seen as a trailblazer in the student finance space, appealing to banks like JPMorgan who were eager to attract young professionals that could become loyal, longterm customers.
Fraud allegations
Access to Frank's client list is one of the things JPMorgan Chase was after when it entered into talks to buy the company in 2021.
At the time, Javice was claiming Frank had over 4.25 million clients. In reality, it had around 400,000, Assistant US Attorney Nicholas Chiuchiolo told the jury.
The prosecution claims that Javice repeatedly lied to JPMorgan in the summer of 2021 to sell her startup in a deal that would earn her $45 million.
When JPMorgan Chase attempted to verify Frank’s client list, Charlie Javice initially asked the company’s head of engineering to generate “synthetic data” to support the claim of over 4 million customers, a prosecutor said.
When the employee refused to do “anything illegal,” she hired an external data scientist for $105,000 to fabricate a dataset showing more than 4.2 million students, the prosecutor said.
Javice was arrested in April 2023 and is currently out on bail. She did not testify during the five-week trial that is expected to go to jury Thursday.
(With inputs from agencies)
