Frank Founder Gets 7 Years for Defrauding JPMorgan

Startup founder Charlie Javice has been sentenced to seven years in prison for defrauding JPMorgan Chase.

Javice, 33, had been convicted of fraud in March after being charged with overstating the customer base of her student loan financing platform Frank.

According to multiple published reports Monday (Sept. 29), she must also pay $22.36 million in forfeiture and $287 million in restitution to JPMorgan in addition to her 85-month prison term. Prosecutors had been seeking a sentence of up to 12 years.

A report by CNBC said Javice cried while addressing the court, asking for forgiveness from JPMorgan, Frank’s employees, shareholders and investors.

“I will spend my entire life regretting these errors,” Javice said. “I’m asking with all of my heart for forgiveness. I ask your Honor to temper justice with mercy … I will accept your judgment with dignity and humility.”

Per CNBC, Judge Alvin Hellerstein called Javice’s words “very moving” but that he couldn’t grant her the forgiveness she was seeking.

“I sentence people not because they’re bad, but because they do bad things,” he said. “I don’t think you’ll be committing other crimes and that you’ll be devoting your life to service, but others have to be deterred.”

JPMorgan acquired Frank in 2021, but two years later sued Javice and fellow executive Olivier Amar. That suit said the banking giant had purchased Frank believing the startup had about 4.3 million customers but later learned that the actual number was around 300,000.

The suit also alleged that Javice and Amar had someone create millions of fake accounts to mislead the bank as it was considering the deal. Javice and Amar — who was also convicted earlier this year and due to be sentenced in the coming weeks — were indicted a few months after the lawsuit.

During the trial, defense attorney Jose Baez had argued that JPMorgan conducted extensive due diligence into Frank, and knew how many customers the startup had prior to making the purchase. Baez told the jury in his opening that JPMorgan only claimed it was tricked after financial aid regulations changed, and fraud was the only condition that permitted it to get out of its contract with Frank.

But jurors also heard from prosecution witnesses including an employee who testified that Javice had directed him to fabricate millions of users.

When this employee declined, the executive tried to reassure him, saying “Don’t worry. I don’t want to end up in an orange jumpsuit.”