Frank Founder Charlie Javice Convicted of $175 Million Fraud

Startup founder Charlie Javice has been convicted of defrauding JPMorgan Chase by misleading the bank about her customer base.

A federal jury in Manhattan on Friday (March 28) found Javice — founder of student financial aid platform Frank — and fellow executive Olivier Amar guilty of fraud and conspiracy to commit fraud, The Wall Street Journal (WSJ) reported.

The verdict followed a nearly month-long trial against the pair, who had been accused of inflating Frank’s customer base to secure a $175 million acquisition by JPMorgan.

The prosecution had argued that Javice and Amar had paid a data scientist to make it appear that Frank had 10 times as many customers as it really did.

Based on those numbers, JPMorgan agreed to purchase Frank, in hopes of cross-selling banking products to what it thought would be millions of users. In reality, Frank had only around 300,000 customers.

Javice was charged with fraud in April 2023. She and Amar now face decades in prison, the WSJ report said. Months earlier, JPMorgan had sued Javice for fraud.

According to WSJ, Javice is likely to appeal her conviction. Her attorneys have spent weeks arguing that the trial was improper because Amar’s lawyers have been functioning as a “second prosecutor” against their client.

The report also noted that the trial had highlighted failures in the JPMorgan due diligence process. Prosecutors had shown evidence that — while in talks with the bank — Javice had helped develop a dataset to show that her company had millions of users.

Frank’s head of engineering testified in court that Javice had tried to enlist him to create the list, a request which he refused. Javice then hired a mathematics professor, paying him $18,000 to create a synthetic data file of 4 million fake customers.

The WSJ report said this field was turned over to a third-party company that essentially counted the number of data fields and told JPMorgan that it showed Javice had 4 million customers.

Bank executives who were involved in the acquisition said the deal relied chiefly on Javice’s statements to them, although some employees at JPMorgan had flagged concerns about her data.

According to court testimony, when the bank attempted to market its services to Frank customers based on the company’s data, only 28% of the emails were delivered successfully.