Charlie Javice convicted of fraud in $175 million JPMorgan startup deal

In a major legal development, Charlie Javice, founder of the financial aid startup Frank, was found guilty of defrauding JPMorgan Chase during the $175 million acquisition of her company in 2021.

The 32-year-old entrepreneur was convicted on multiple federal charges, including wire fraud, bank fraud, and securities fraud, for inflating the number of Frank users to mislead JPMorgan into believing the platform had over 4 million customers. In reality, the true number was closer to 300,000.

What was the fraud about?

According to prosecutors, Javice presented fake customer data during the due diligence phase of the sale, even working with a data scientist to fabricate user information. JPMorgan later discovered inconsistencies after the acquisition, when outreach emails to supposed Frank users bounced back at unusually high rates.

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The scandal came to light in 2022 when JPMorgan sued Javice, accusing her of deception and misrepresentation. The lawsuit alleged that she created a “list of fake customers to induce JPMorgan to acquire her startup.”

What did prosecutors say?

US Attorney Damian Williams said:

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“Charlie Javice engaged in a brazen scheme to deceive one of the nation’s largest banks. She lied about her company’s success to get a huge payday — and now she’s been held accountable.”

Prosecutors argued that Javice’s motive was personal enrichment, and that she personally gained tens of millions of dollars from the deal.

What’s next for Charlie Javice?

Javice, who once made the Forbes 30 Under 30 list and was hailed as a rising star in fintech, now faces the possibility of decades in prison. A sentencing date has not yet been announced.

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Her attorneys have indicated they plan to appeal the verdict.

What was Frank?

Frank was launched as a platform to simplify the college financial aid process for students in the U.S. It aimed to help families complete the FAFSA form more easily, claiming to democratize access to higher education funding.

JPMorgan, impressed by Frank’s pitch and apparent traction with college students, acquired the company in hopes of deepening its relationship with younger customers. But the deal quickly turned into a cautionary tale of startups, hype, and due diligence gone wrong.