Charlie Javice, the founder of the student loan startup Frank, was found guilty on Friday of defrauding JPMorgan Chase out of $175 million by vastly exaggerating her company's customer base. The verdict came after a five-week trial in New York City, where a jury determined that Javice had lied about having over four million clients when the bank acquired her company in 2021. In reality, Frank had only about 300,000 customers.
Javice, 32, appeared on Forbes' '30 Under 30' list and was known for promoting Frank as a revolutionary tool for simplifying the Free Application for Federal Student Aid (FAFSA). JPMorgan executives testified that Javice claimed the startup had over four million users and projected 10 million by year's end, leading the bank to pay $175 million for the company. However, after the acquisition, JPMorgan discovered the customer numbers were fabricated.
Prosecutors presented evidence that Javice paid a college friend $18,000 to generate fake customer data using a computer program. Frank's chief of engineering, Patrick Vovor, testified that Javice asked him to create synthetic data to support her claims, but he refused, stating, 'I told them I would not do anything illegal.' Defense lawyers challenged Vovor's credibility, suggesting he had a personal motive, which he denied.
Javice's lawyer, Jose Baez, argued that JPMorgan was aware of the actual customer numbers and invented fraud allegations due to buyer's remorse after regulatory changes diminished the value of the data. 'JPMorgan is not telling the truth,' Baez said. 'They knew the numbers.'
Javice faces a potential lengthy prison sentence. She has been free on $2 million bail since her arrest in 2023. The case highlights the risks of inflated claims in the tech startup world, where founders sometimes face legal consequences for misleading investors.
