Frank Fraud Trial Begins With Accusations of Lies From Both Sides

Did Charlie Javice dupe JPMorgan Chase into buying her college financial aid startup Frank?

Or did the world’s largest bank simply accuse Frank of fraud out of buyer’s remorse?

Those will be the questions facing jurors as Javice’s trial continues in federal court in Manhattan this week. As per a Friday (Feb. 21) Reuters report, Javice, 31, has pleaded not guilty to securities fraud, wire fraud, bank fraud and conspiracy over JPMorgan’s $175 million acquisition of her company in July 2021.

The prosecution alleges that Javice lied by telling the bank that Frank had 4.25 million customers when it had only about 300,000. JPMorgan claims it learned of the discrepancy when it tried to get in touch with customers it believed were legitimate to sell products, and got back far fewer responses than expected.

However, Reuters reported, defense attorney Jose Baez said during his opening arguments that JPMorgan performed extensive due diligence into Frank, and knew how many customers it had before carrying out the purchase.

He said JPMorgan claimed it was tricked only a year later when financial aid regulations changed, and fraud was the only condition that allowed it to exit its contract with Frank.

Meanwhile, prosecutor Rushmi Bhaskaran said during her opening argument that Javice collected phony names and addresses from a college friend after JPMorgan requested the data.

Bhaskaran added that Javice’s co-defendant Olivier Amar, who was Frank’s chief growth officer, purchased “sham lists” of student data from third parties for Frank to falsely pass off as customers.

“It was through their lies that they became multimillionaires,” Bhaskaran said.

Jonathan Cogan, an attorney representing Amar, told jurors his client was “out of the loop” during negotiations with JPMorgan.

As PYMNTS wrote last week, the acquisition of Frank came around a year after JPMorgan Chase CEO Jamie Dimon said the lender would be “much more aggressive” in how it approached acquisitions. The bank also began adding FinTechs with backgrounds in sustainable investing, robo-advising and constructing tax-efficient portfolios.

JPMorgan Chase sued Javice in 2023, saying that she and Amar defrauded the bank by inflating its customer data. Dimon has called the Frank acquisition a “huge mistake,” the Reuters report noted.