Summary:
Charlie Javice accused of brazen fraud in $175 million acquisition by JPMorgan Chase.
Prosecutors claim she inflated her startup Frank's user base from 400,000 to over 4 million.
Javice allegedly hired a data scientist to create fake data to support her claims.
She was arrested in April 2023 and is currently out on bail.
The Fraud Allegations Against Charlie Javice
Charlie Javice is facing serious charges of fraud after allegedly inflating her startup's user base to secure a $175 million acquisition by JPMorgan Chase. During the closing statements at her trial in New York, federal prosecutors described her actions as “brazen fraud.” Javice is accused of deceiving JPMorgan into believing her student-finance startup, Frank, had more than 4 million users, when the actual number was closer to 300,000.
Assistant US Attorney Nicholas Chiuchiolo urged the jury to convict Javice and a former executive of her startup on charges of conspiracy and fraud. In contrast, Javice's lawyer argued for her acquittal, claiming the case was “incredibly flawed” and lacked sufficient evidence.
Who is Charlie Javice?
A University of Pennsylvania graduate, Charlie Javice founded Frank in her mid-20s and was recognized on the Forbes ‘30 Under 30’ list in 2019. Frank aimed to simplify the Free Application for Federal Student Aid, a complex form for students seeking financial aid for higher education. The startup was celebrated for helping financially struggling students navigate intricate tuition aid processes, making it attractive to banks like JPMorgan looking to build relationships with young professionals.
Details of the Fraud
JPMorgan Chase was particularly interested in Frank's client list, which was a key factor in their acquisition discussions in 2021. At that time, Javice claimed that Frank had over 4.25 million clients, but the actual figure was around 400,000. Prosecutors allege that Javice lied repeatedly during the summer of 2021 to facilitate the sale of her startup, which would net her $45 million.
In an effort to substantiate her claims, Javice allegedly instructed her engineering team to create “synthetic data” to back up the inflated user numbers. When her team refused to engage in illegal activities, she hired an external data scientist for $105,000 to fabricate data showing over 4.2 million students.
Javice was arrested in April 2023 and is currently out on bail. She did not testify during the five-week trial, which is now in the jury's hands.
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