Charlie Javice, founder of fintech startup Frank has been sentenced to seven years of jail for cheating JPMorgan Chase of $175 million. According to news agency AP, the 32-year-old was convicted of duping America’s largest bank when it bought her company in 2021. She reportedly made false records that made it seem like Frank had over 4 million customers when it had fewer than 300,000. As per the report, Javice was first arrested in 2023 and has been free on $2 million bail. She was convicted of conspiracy, wire and bank fraud in March this year. Her prison sentence will be followed by 3 years of supervised release.Announcing her prison sentence, US District Judge Alvin Hellerstein said Javice’s crimes “required a great deal of duplicity,” but that she was “a good person who has done good deeds.” The judge also criticized the bank, saying “they have a lot to blame themselves” as it failed to do adequate due diligence. He further added that he was “punishing her conduct and not JPMorgan’s stupidity.”
Who is Charlie Javice
Charlie Javice was born in Westchester County, New York. She graduated from University of Pennsylvania’s Wharton School of Business with a bachelor’s degree in finance and legal studies. In 2017, Javice founded student financial aid startup, Frank. The online platform promised to simplify the process of filling out the Free Application for Federal Student Aid – a complex government form used by students to apply for aid for college or graduate school. The same year she faced scrutiny from the US Department of Education in 2017 for misleading customers to believe that the startup was government-affiliated. The matter was resolved in 2018 and subsequently, the website domain was changed from frankfafsa.com to frank.com.Frank’s backers included venture capitalist Michael Eisenberg. In 2021, she scored a one-on-one meeting with JPMorgan Chase CEO, Jamie Dimon when the bank bought her startup. She appeared in Forbes’ “30 Under 30” list in 2022.
What is Charlie Javice accused of
As per a release on US State Attorney’s office, Charlie Javice is accused of fabricating data of her startup customer base. She began to pursue the sale of Frank to a larger financial institution in 2021. Two major banks, one of which was JPMC, expressed interest and began acquisition processes with Frank. Javice represented repeatedly to those banks that Frank had 4.25 million customers or “users.” She explicitly defined “users”—to both banks—as individuals who had signed up for an account with Frank and for whom Frank therefore had at least four identified categories of data (i.e., first name, last name, email address, and phone number). In fact, Frank had approximately 300,000 users.When JPMC sought to verify the number of Frank’s users and the amount of data collected about them, she hired a data scientist to create the synthetic data set. After the data set was created, JAVICE provided that synthetic data set to an agreed-upon third-party vendor in an effort to confirm to JPMC that the data set had over 4.25 million rows.
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