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Charlie Javice, founder of the student loan assistance platform Frank, has been found guilty of fraud for misleading JPMorgan Chase during the $175 million acquisition of her company. Prosecutors argued that Javice significantly inflated the startup’s user numbers to secure the lucrative deal.
Javice Convicted in Frank Customer Data Fraud Case
Following a five-week trial, a jury delivered a guilty verdict against Javice on Friday. The decision affirmed the prosecution’s assertion that she fabricated a substantial portion of Frank’s purported customer base to induce JPMorgan’s acquisition of the technology firm.
Discrepancy in User Numbers Uncovered
In 2021, when JPMorgan finalized the purchase of Frank, the financial institution believed the startup served 4 million users. However, upon attempting marketing outreach to the alleged user base, the bank discovered a stark reality: only 300,000 actual customers existed. Approximately 70% of marketing emails sent to purported Frank users bounced back, revealing the inflated figures.
Allegations of Fabricated Data
Evidence presented during the trial indicated that Javice allegedly engaged a mathematics professor to generate fraudulent customer data. This fabricated information was reportedly presented to JPMorgan during the bank’s due diligence process as it evaluated the potential acquisition.
Defense Arguments and Sentencing
The defense team contended that the legal action stemmed from buyer’s regret, exacerbated by alterations in federal processes for completing financial aid applications. Javice entered a not guilty plea and chose not to testify in her own defense throughout the proceedings.
Potential Decades-Long Sentence
Javice, age 32, now faces a potential prison sentence of multiple decades. Sentencing is anticipated to occur in August, according to reports from CNBC.
Frank’s Inception and Recognition
Javice established Frank in 2017 during her mid-twenties. Prior to the fraud allegations, she gained recognition, including a spot on the Forbes 30 Under 30 list in 2019.