The 31-year-old tech entrepreneur who allegedly inflated user numbers at her college financial aid startup in order to dupe JPMorgan Chase into buying her company for $175 million was released on $2 million bond on Tuesday.
Charlie Javice, founder of the financial planning site Frank, was seen leaving Manhattan federal court on Tuesday after federal prosecutors announced a slew of charges against her, including conspiracy, wire fraud, bank fraud, and securities fraud.
If convicted, Javice, a Miami Beach resident who was featured on the Forbes “30 under 30” list in 2019, could face decades in prison.
She was taken into custody by authorities at Newark Airport in New Jersey on Monday night before her court appearance on Tuesday, according to the feds.
Javice, who holds US and French citizenship, surrendered both of her passports as part of an agreement with prosecutors, according to Bloomberg News.
She is also limited to traveling between New York City and South Florida.
Javice “engaged in a brazen scheme to defraud” JPMorgan Chase, according to Manhattan US Attorney Damian Williams.
“She lied directly to JPMC and fabricated data to support those lies — all in order to make over $45 million from the sale of her company,” according to Williams.
A charging document in Manhattan federal court said she claimed her company had over four million users when it had fewer than 300,000 customers.
When JPMorgan asked for proof of Frank’s user base, Javice allegedly paid “outside data scientist” $18,000 to create a fake customer list.
The spoofed data allegedly helped to secure JPMorgan’s commitment to a deal to buy Frank, which was designed to streamline the application process for those seeking financial aid for college tuition.
Javice received a $21 million payout for selling for an equity stake in Frank to JPMorgan and an additional $20 million in the form of a retention bonus, the feds said.
Javice and other Frank employees were also given jobs at the bank.
The federal complaint alleged that Javice initially approached Frank’s director of engineering to create the fake data set.
When the engineer pushed back on the request, Javice tried to reassure the employee that it was legal.
“We don’t want to end up in orange jumpsuits,” Javice said, according to the complaint.
JPMorgan realized the scam after it launched an email marketing campaign for individuals included on Frank’s purported list of customers that generated few responses.
The Frank founder also faces a set of civil charges from the SEC.
SEC enforcement chief Gurbir Grewal said Javice had engaged in an “old school fraud.”
“She lied about Frank’s success in helping millions of students navigate the college financial aid process by making up data to support her claims, and then used that fake information to induce JPMC to enter into a $175 million transaction,” Grewal said.
When reached for comment, a representative for Javice said she “denies the allegations.”
In late December, JPMorgan filed suit against Javice for allegedly leading the bank to believe that Frank “was a business deeply engaged with the college-aged market segment with 4.625 million customers.”
“Instead, it received a business with fewer than 300,000 customers,” according to the explosive suit filed in Delaware federal court.
Javice countersued, alleging that she was fired last November from her post as head of student solutions so that JPMorgan could avoid paying out the $20 million bonus.
At the time, her attorney, Alex Spiro, described the allegations laid out in JPMorgan’s lawsuit as “nothing but a cover.”
Javice’s attorney, Alex Spiro, and a JPMorgan representative declined to comment on the latest charges.
Additional Reporting by Thomas Barrabi
[Written in collaboration with other media outlets with information from the following sources]
