Charlie Javice (from YouTube)
Charlie Javice, the founder of college financial planning platform Frank, has been charged with defrauding JPMorgan Chase out of $175 million. The 31-year-old claimed to have had millions of clients for her student loan service company when, in fact, she only had about 400,000. The one-time business wunderkind I now facing up to 30 years in prison.
Charlie Javice stands charged with wire, bank and securities fraud and was accused by federal prosecutors of trying to “fraudulently induce J.P. Morgan Chase to acquire” her company. She was paid $21 million for her share in Frank. The charges came after JPMorgan sued Javice over the alleged fraud.
“This arrest should warn entrepreneurs who lie to advance their businesses that their lies will catch up to them,” U.S. Attorney Damian Williams said in a statement, “and this Office will hold them accountable for putting their greed above the law.”
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Remember Elizabeth Anne Holmes, the founder of Theranos? Holmes faked the data about Theranos’ success with its blood testing technology that was supposed to determine what, if any, diseases people were likely to develop based on their blood samples. This would have allowed early detection and preemptive treatment. The only problem was the tech did not really exist. Holmes was convicted of defrauding investors in her company and sentenced to more than 11 years in prison.
Well, this sounds a lot like what Charlie Javice is accused of doing with Frank; making up information about her businesses’ non-existent achievements in order to fool potential investors into putting up the money.
According to a report in the Financial Times, the U.S. government is now reviewing JPMorgan Chase’s major financial moves over the past few years after this came to light.
Founded in 2016 by Charlie Javice and based in New York City, Frank offered a free service to help people fill out their student loan forms. It said it would make real money from a $49 fee for extended service. If the company really had more than 4 million customers as it claimed, then that could have been $200 million in revenue so far.
