Charlie Javice, the entrepreneur behind the student loan startup Frank, has been handed a prison sentence exceeding seven years for masterminding a significant fraud against JPMorgan Chase. A jury's verdict in March found Javice guilty on multiple counts, including bank, wire, and securities fraud, along with conspiracy to commit fraud, stemming from the bank's ill-fated acquisition of her company for $175 million (£130m).
The core of Javice's deception involved fabricating customer lists to inflate Frank's perceived value. She presented JPMorgan with a supposedly vast database of 4 million users, a figure that, in reality, was grossly exaggerated. Investigations later revealed the actual user count to be closer to 300,000, exposing the massive discrepancy that lured the financial giant into the acquisition.
During sentencing proceedings, federal prosecutors had advocated for a 12-year imprisonment, while Javice's legal team, despite her plea of not guilty, requested a more lenient 18-month term. Ultimately, US District Judge Alvin Hellerstein ordered Javice not only to serve more than seven years but also to forfeit over $22 million. Additionally, she, alongside Frank's former chief growth officer, Olivier Amar, was mandated to pay over $287 million in restitution to JPMorgan.
Before this spectacular downfall, the 33-year-old Javice had forged a reputable name for herself in the finance sector, founding Frank in 2017. The startup garnered accolades for assisting students with college financial aid, earning Javice a coveted spot on Forbes' '30 Under 30' list. JPMorgan’s interest was piqued by Frank’s seemingly extensive user data, which the bank intended to leverage for marketing its banking products to younger demographics. However, the fraud came to light only after the 2021 acquisition was finalized, prompting JPMorgan CEO Jamie Dimon to famously label the deal a "huge mistake."
In a letter addressed to Judge Hellerstein this month, Ms. Javice expressed remorse, stating, "I accept the jury's verdict and take full responsibility for my actions." She further added, "There are no excuses, only regret," acknowledging the severe consequences of her fraudulent scheme.
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Originally published at: https://www.bbc.com/news/articles/c4gwj15djdxo
