Frank founder Charlie Javice, who allegedly defrauded JPMorgan out of $175 million, hit with federal charges
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Charlie Javice, the 31-year-old founder of financial aid startup Frank, has been charged by federal prosecutors with financial fraud after JP Morgan Chase & Co. alleged in a civil suit last year that Javice had faked millions of Frank customers to convince the bank to buy her company for $175 million.
Federal prosecutors in Manhattan charged Javice with wire fraud affecting a financial institution, securities fraud, bank fraud and conspiracy on Tuesday. They said she was arrested Monday night in New Jersey.
The Securities and Exchange Commission also laid civil fraud charges against Javice on Tuesday, with Director of the Division of Enforcement Gurbir S. Grewal alleging that Javice engaged in "old school fraud."
The criminal charges have a maximum sentence of 30 years, but defendants in federal fraud cases are typically sentenced to much less than the maximum sentence.
"This arrest should warn entrepreneurs who lie to advance their businesses that their lies will catch up to them, and this Office will hold them accountable for putting their greed above the law," US Attorney Damian Williams said in a statement on Tuesday.
Javice's attorney in the civil case, Alex Spiro, declined to comment.
Spiro previously told Insider that Javice disputes the bank's claims. Javice filed her own suit against the bank asking it to advance her legal fees, and alleging JPMorgan fired her "in bad faith" to avoid having to pay a $20 million retention bonus.
Javice has a pattern of exaggerating her success, an Insider investigation found. As a teenager, the young entrepreneur rose to acclaim as the founder of a microfinance startup that raised $300,000 but never disbursed a loan.
It's also unclear how Frank could have accomplished some of what it claimed to do on behalf of students. The startup has said its users received an average of $28,000 in financial aid, roughly twice the average amount of aid awarded to college students, and that Frank could get students "thousands off their tuition." A college-aid expert who spoke to Insider said those claims were dubious.
JPMorgan acquired Frank in 2021 for $175 million, but began to question the authenticity of the startup's purported 4 million users after an email marketing campaign ended in "disaster," according to the bank's lawsuit and a filing by prosecutors. Out of 400,000 emails sent to Frank users, more than 70% bounced back and only 103 were opened, the bank claimed.
An internal investigation revealed that Javice and Frank chief growth officer Olivier Amar — referred to as "CC-1" in the federal charges — paid a New York data science professor $18,000 to create nearly 4 million fake accounts in order to juice Frank's user numbers, JPMorgan alleged in its lawsuit. Amar later bought a list of student email addresses from a marketing firm for $105,000 in order to make those accounts seem more credible, JPMorgan alleged.
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I am a correspondent on Business Insider's enterprise desk.I focus on money, power, and big names in business, politics and entertainment. I am currently focused on prediction markets, and legal affairs and the legal industry have been a longtime interest of mine.My email address is jnewsham@insider.com, and my Reddit username is u/JackNewsham. If you have sensitive information, please get in touch using your personal email address or connect on the secure messaging app Signal, where my username is jnewsham.77. Use a personal phone and a personal data or WiFi connection.I have broken news about people at the Elon Musk-linked Department of Government Efficiency, worked with whistleblowers, investigated how celebrity musicians spent millions of dollars in federal Shuttered Venue Operators Grants they received during the pandemic, delved into claims of racism and sexual misconduct at the $2.4 billion tech startup Rokt, and written about policing and the trial lawyer Alex Spiro.Previously, I wrote about both Big Law firms that represent big businesses and the plaintiffs' firms and litigation funders that oppose them.I am originally from St. Louis, and graduated from Yale with a bachelor's degree in economics.
Katherine was a correspondent on Business Insider's fast investigations team.She previously covered Amazon, with a focus on the company's extensive warehousing and logistics operations, at Insider and The Seattle Times.She is a graduate of Brown University and Columbia Journalism School's Stabile Center for Investigative Journalism, where she won a Pulitzer Traveling Fellowship and the Peter Keller Award for Editing. Katherine also worked on an Emmy-award-winning episode of The New York Times's television series, The Weekly. Contact her via phone or the encrypted messaging app Signal (+1-206-375-9280).
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