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Frank founder charged with fraud over $175 million JPMorgan deal

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Charlie Javice, Founder/CEO of Frank, which is a college financial aid start-up.

Source: JP Morgan

The Justice Department on Tuesday charged Charlie Javice, founder of college financial planning platform Frank, with defrauding JPMorgan Chase of $175 million. 

Javice, 31, is charged with “falsely and dramatically” inflating the number of customers Frank actually had in a scheme to “fraudulently induce” the bank to acquire the startup, federal prosecutors for the Southern District of New York said. She stood to gain over $45 million from the alleged deception, they added. 

The one-rising tech star – who was once named as one of Forbes’ 30 Under 30 – was arrested Monday night in New Jersey and is expected in court Tuesday afternoon.

She faces four counts. They include one count of conspiracy to commit bank and wire fraud, one count of wire fraud affecting a financial institution, one count of bank fraud and one count of securities fraud. Three of the charges each carry a maximum sentence of 30 years in prison. 

The Securities and Exchange Commission on Tuesday also sued Javice for fraud in connection with the alleged scheme. 

JPMorgan and Jarvice’s attorney, Alex Spiro, did not immediately respond to a request for comment. 

The charges come months after JPMorgan filed a lawsuit against Jarvice alleging she duped the bank into believing Frank had more than four million customers. In reality, the startup had fewer than 300,000, JPMorgan said in its suit. 

The bank shut down the startup in January. 

“This arrest should warn entrepreneurs who lie to advance their businesses that their lies will catch up to them, and this Office will hold them accountable for putting their greed above the law,” U.S. Attorney Damian Williams said in a statement.

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