Charlie Javice gets 7 yrs in prison for defrauding JPMorgan of $175 million

The 33-year-old Frank founder was convicted of conspiracy, bank fraud, and wire fraud after faking user records to sell her startup to JPMorgan in a $175 million deal

Charlie Javice, the founder of college financial-aid startup Frank, was sentenced on Monday to more than seven years in prison for defrauding JPMorgan Chase of $175 million by vastly inflating her company’s customer base.

 

The 33-year-old entrepreneur was convicted in March of falsifying records to make it appear that Frank had more than four million users when it had fewer than 300,000.

 

Frank: Startup that promised to simplify aid

 

A University of Pennsylvania Wharton graduate, Javice launched Frank to simplify the Free Application for Federal Student Aid (FAFSA) process. The startup claimed to help students maximise aid and streamline paperwork, charging fees in the process.

 

Frank was backed by prominent investors and Javice was featured in Forbes’ “30 Under 30” list. She also appeared on cable news channels to promote the startup.

 

Judge rejects plea for leniency

 

Before sentencing, Javice told the court she was “haunted” by her actions, saying through tears: “I made a choice that I will spend my entire life regretting.”

 

Her lawyer argued that JPMorgan’s acquisition talks pitted “a 28-year-old versus 300 investment bankers from the largest bank in the world.”

 

Judge Alvin K Hellerstein acknowledged the bank’s lack of due diligence but ruled: “I am punishing her conduct and not JPMorgan’s stupidity.”

 

Convicted of fraud, remains free on bail

 

Javice, arrested in 2023 and free on $2 million bail, was convicted of conspiracy, bank fraud, and wire fraud. The judge allowed her to remain free while she appeals.

 

Her lawyers maintained JPMorgan suffered “buyer’s remorse” after acquiring Frank in 2021.

 

Comparisons with Theranos case

 

Javice’s case has been likened to that of Elizabeth Holmes, founder of the failed health-tech company Theranos. Her lawyer argued that Frank’s software “actually worked,” unlike Theranos’ product, which “endangered patients.”

 

He also claimed JPMorgan rushed its deal fearing a rival might buy Frank first.