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Investing.com -- Charlie Javice, entrepreneur and founder of the college financial aid startup Frank, was convicted on Friday for defrauding JPMorgan Chase (NYSE:JPM). The bank had bought her startup for $175 million in July 2021. The verdict came after a five-week trial in Manhattan federal court, presided over by U.S. District Judge Alvin Hellerstein.
Javice, a University of Pennsylvania’s Wharton School alumna and a member of Forbes magazine’s "30 Under 30" list in 2019, was praised for simplifying college financial aid. However, JPMorgan sued her in December 2022, accusing her of lying about the size of Frank’s customer base. The Manhattan U.S. Attorney’s office charged her with securities fraud, wire fraud, bank fraud and conspiracy four months later.
Prosecutors stated Javice falsely assured JPMorgan that Frank had 4.25 million customers, while the actual number was around 300,000. The discrepancy was discovered when JPMorgan attempted to contact customers for selling products and received fewer responses than anticipated.
Javice, who resides in Florida, pleaded not guilty and did not testify at the trial. Her attorney, Jose Baez, argued that JPMorgan was aware of the number of Frank’s clients before finalizing the purchase. He suggested the bank’s complaint was due to "buyer’s remorse."
Baez further claimed that JPMorgan wanted to exit the contract with Frank due to changes in financial aid regulations. He stated that a fraud claim was the only condition that would allow the bank to do so. JPMorgan CEO Jamie Dimon has referred to the Frank acquisition as a "huge mistake."
Olivier Amar, Frank’s chief growth officer and Javice’s co-defendant, was also convicted on fraud and conspiracy charges. Prosecutor Rushmi Bhaskaran stated in her opening remarks that Amar purchased "sham lists" of student data from third parties, which he and Javice presented as customers to JPMorgan. Bhaskaran said, "It was through their lies that they became multimillionaires."
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