Charlie Javice, the founder of now-defunct startup Frank, has been sentenced to 85 months (just over seven years) in prison for defrauding JPMorgan Chase in a $175 million acquisition deals.
The woman entrepreneur was convicted earlier this year by a New York jury for falsely inflating the number of users on her platform, which claimed to simplify financial aid applications for students. In 2021, JPMorgan bought Frank with hopes of using the service to connect with younger banking customers.
According to US prosecutors, Javice misled the bank by presenting millions of fake user accounts. When a company engineer refused to help, citing legal concerns, she allegedly hired an external data scientist to fabricate a synthetic user dataset.
During the sentencing at the US District Court in Manhattan, Judge Alvin Hellerstein said Javice's actions were serious and deserved punishment. Prosecutors described the scheme as "audacious and multifaceted," driven by greed.
Although the judge acknowledged that JPMorgan had shown "very poor" due diligence before the acquisition, he emphasised that the fraud was entirely orchestrated by Javice.
Prosecutors had pushed for a 12-year sentence, but the judge settled on just over seven years. Javice is also expected to face further legal consequences in related civil proceedings.
"Fraud remains fraud whether you outsmart someone who is very smart or someone who is a fool," said Hellerstein, who noted that Javice had no prior criminal history and had a history of "good works" on behalf of charitable organizations and family members.
Javice, now 33, apologized to JPMorgan and Frank's investors and employees. Addressing the court in an ivory pantsuit, she grew emotional as she addressed her father and mother.
"At 28, I did something which runs against the grain of my upbringing," Javice said. "These errors, this complete collapse in character ... not a day goes by that I do not replay my mistakes."
Who Is Charlie Javice and How She Pulled Off the $175 Million Scam
Charlie Javice is the founder of the fintech startup Frank, launched in 2017 to simplify the college financial aid process for students and parents. She was also featured in Forbes' "30 Under 30" list for her early success in the tech and education space.
Her mission was clear: to make higher education more affordable. "College tuition is too damn high," she wrote on LinkedIn in 2020, adding, "We founded Frank with a rebellious spirit and a big goal: Students should pay less for college."
Frank quickly gained attention, and Javice claimed the platform had 4.25 million users. However, after JPMorgan acquired the company for $175 million in 2021, it discovered that the actual number of users was closer to 300,000. The bank became suspicious when it was unable to successfully email most of the alleged customer base, leading to the discovery that Javice had fabricated user data.
(With inputs from AFP)
