Topline
Entrepreneur Charlie Javice was found guilty Friday of defrauding JPMorgan Chase after it bought her financial aid startup Frank for $175 million in 2021 based on fraudulent customer numbers.
Javice was found guilty Friday afternoon. (AP Photo/John Minchillo)
Copyright 2023 The Associated Press. All rights reserved.Key Facts
Javice, 32, was convicted of defrauding JPMorgan after prosecutors accused her of artificially inflating her startup’s customer list by 10 times, according to multiple outlets.
The Forbes Under 30 alum still faces a civil trial from JPMorgan as well. The startup founder, who pleaded not guilty to her charges and denied the fraud allegations against her, faces a maximum of 30 years in prison, NBC News reported.
JPMorgan’s lawsuit against Javice, one separate from the federal trial concluded Friday, remains on standby, according to The New York Times, which noted the bank is seeking to get Javice’s share of the $175 million it paid to acquire Frank, her startup designed to make filing for student financial aid easier and more efficient.
Patrick Vovor, Frank’s chief of engineering, testified during the trial that Javice asked him to create fake data to back the existence of the startup’s purported 4 million users, telling the court he refused the request as JPMorgan insisted on verifying the customers, according to the Associated Press.
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Key Background
Javice sold her startup to JPMorgan in 2021 after making the Forbes Under 30 list in 2019. Javice, who grew up in an affluent area in New York and graduated from the University of Pennsylvania’s Wharton business school in three years, propped Frank up as “an Amazon for higher education” and garnered scrutiny from the federal government in the company’s early days. The Department of Education accused Frank in 2017 of misleading customers to believe the startup was affiliated with the federal government, resulting in a settlement one year later that forced Frank to change its web address and make sure consumers knew it was not affiliated with the government. Javice would go on to claim years later Frank aided “over 5 million students at over 6,000 colleges.” After JPMorgan attempted to contact some of the millions of purported users, the bank soon discovered the extent of the fake clients, later suing Javice in 2022. The Department of Justice launched its own lawsuit against Javice just four months later, charging her with bank and wire fraud.
Further Reading
‘Fake It ‘Til You Make It’: Meet Charlie Javice, The Startup Founder Who Fooled JP Morgan (Forbes)
Charlie Javice Faces Court Showdown Over Alleged $175 Million JP Morgan Fraud (Forbes)
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