Startup founder Charlie Javice convicted of defrauding JPMorgan Chase in $175 million scam

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Charlie Javice and Olivier Amar have been found guilty of defrauding JPMorgan Chase by exaggerating customer numbers of their startup, Frank. They face decades in prison following their conviction for conspiracy, bank fraud, and wire fraud, with sentencing set for July 23.

Charlie Javice, the founder of a startup promising to transform the student financial aid process, has been found guilty of defrauding JPMorgan Chase out of $175 million by vastly exaggerating her customer numbers.

A Manhattan federal court jury delivered the guilty verdict on Friday after a five-week trial leaving 32 year old Javice along with her co-defendant, Olivier Amar, with the possibility of facing decades behind bars.

As her verdict was read, Javice remained expressionless, with her lawyer placing a hand on her back in consolation. She left the courtroom without commenting, brushing past reporters.

Javice was in her mid-20s when she founded Frank, a company promising to simplify the notoriously complex free application for federal student aid (FAFSA) process. Marketed as a tool to help students access financial aid faster for a small fee, Frank gained traction, even earning Javice a spot on Forbes’ 30 Under 30 list.

JPMorgan saw an opportunity and acquired the startup in 2021, believing it had access to a vast pool of young clients. However, the bank later discovered that instead of the 4 million users Javice had claimed, and a projected 10 million by year’s end, the real figure was only around 300,000.

A supposed customer list that Frank provided turned out to be largely fabricated.

‘They could lie and cheat’

Prosecutors argued that Javice and Amar, Frank’s chief growth and acquisition officer, knowingly misled JPMorgan to secure the multimillion-dollar deal.

“While Javice and Amar may have thought that they could lie and cheat their way to a huge payday, their lies caught up with them, and they now stand convicted by a jury of their peers,” Acting Manhattan US attorney Matthew Podolsky said in a statement, quoted by news agency AP.

Evidence presented in court revealed that when Frank’s chief software engineer, Patrick Vovor, was asked to generate synthetic data to support the exaggerated user numbers, he refused. He testified that when he questioned the legality of the request, Javice and Amar reassured him, even joking that they didn’t want to end up “in orange prison jumpsuits.” Instead, prosecutors said Javice later paid a college friend $18,000 to create millions of fake names and fabricated details.

Defence argued JPMorgan had “buyer’s remorse”

Javice’s lawyer, Jose Baez, countered that JPMorgan knew what it was getting when it bought Frank, claiming the bank manufactured fraud allegations due to “buyer’s remorse” after regulatory changes rendered the data less valuable for recruiting new customers.

“JPMorgan is not telling the truth,” Baez insisted, “They knew the numbers.”

Javice and Amar were convicted on all four counts in their indictments, including conspiracy, bank fraud, and wire fraud, charges that each carry a maximum sentence of 30 years in prison.

Awaiting sentencing

Javice, who has been free on a $2 million bail since her 2023 arrest, is due to be sentenced on 23 July. Her defence team has requested that the judge set aside the verdict, arguing that the evidence was insufficient.

Meanwhile, a dispute remains over whether Javice and Amar should wear ankle monitors while awaiting sentencing. Her lawyers argue that the device would interfere with her new career teaching pilates for three to four hours a day.

Judge Alvin K Hellerstein is set to rule on these matters next week.

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