On Friday, a Manhattan jury found Charlie Javice, the 33-year-old CEO of a student loan startup, guilty of several fraud-related charges, concluding a case that accused her of misleading JPMorgan Chase into acquiring her company. The charges could result in a maximum sentence of 30 years, with a sentencing phase to follow in the coming weeks.
The jury reached its decision after around four hours of deliberation, ending approximately five weeks of testimony. During the trial, prosecutors alleged that Javice, along with co-defendant Olivier Amar, fabricated customer data to facilitate the 2021 sale of their financial aid company, Frank, to JPMorgan Chase.
Frank was established in 2017 by Javice to assist students with completing the Free Application for Federal Student Aid forms. By 2021, the company was sold to JPMorgan Chase for $175 million, at a time when Javice had gained significant media attention and recognition, including being featured on the Forbes 30 Under 30 list.
JPMorgan Chase alleged that their decision to purchase Frank was based on its purported four million customers, a claim later contradicted by evidence showing only 300,000 actual customers. This discrepancy was discovered in January 2022 when marketing emails sent to 400,000 alleged Frank customers saw a considerably low delivery and open rate, as detailed in the bank’s lawsuit against Javice.
The bank accused Javice and Amar of collaborating with a data scientist to artificially create millions of fake customer accounts to mislead them. Consequently, JPMorgan Chase shut down the Frank website in January 2023 and initiated legal proceedings against Javice in the Delaware district court.
In April 2023, the case escalated when the Department of Justice and the Securities and Exchange Commission filed their own lawsuits against Javice. She faced separate criminal charges of conspiracy to commit wire and bank fraud, as well as counts of wire fraud, bank fraud, and securities fraud, with potential sentences of up to 30 and 20 years, respectively.
The trial, lasting six weeks, featured testimony from prominent individuals like Marc Rowan, CEO and co-founder of Apollo Global Management, who had invested in Frank and was on its board. Rowan testified as a defense witness, defending Frank’s customer definitions and acknowledging Javice and her team’s diligence.
Prosecutor Nicholas Chiuchiolo argued that Javice and Amar sold a company built on fictitious data, turning them into multi-millionaires, while JPMorgan Chase ended up with a database filled with fabricated names. In contrast, Javice’s legal representative, Jose Baez, contended that the purchase agreement lacked specific promises about user numbers. He suggested that JPMorgan Chase had other motivations for acquiring Frank, possibly spurred by competitive pressures from Bank of America.
The case was reportedly weakened, according to Baez, with JPMorgan Chase fully aware of the purchase’s implications. He asserted that the company’s acquisition strategy was informed and deliberate, driven by objectives not entirely aligned with the transaction’s outlined purposes.
