By Luc Cohen and Tatiana Bautzer
NEW YORK xx (Reuters) – Entrepreneur Charlie Javice was convicted on Friday of defrauding JPMorgan Chase into buying her college financial aid startup Frank for $175 million in July 2021.
The verdict followed a five-week trial in Manhattan federal court before U.S. District Judge Alvin Hellerstein.
Javice studied at the University of Pennsylvania’s Wharton School and appeared on Forbes magazine’s “30 Under 30” list in 2019, drawing media praise for simplifying college financial aid for students and parents.
But JPMorgan sued her in December 2022 for lying about Frank’s customer base, and the Manhattan U.S. Attorney’s office charged her four months later with securities fraud, wire fraud, bank fraud and conspiracy.
Prosecutors accused Javice of falsely assuring the largest U.S. bank that Frank had 4.25 million customers, not the 300,000 it actually had.
JPMorgan discovered the inflated number when it tried to contact customers it believed were real to sell products, and received far fewer responses than expected, prosecutors said.
Javice, a Florida resident, pleaded not guilty. She did not testify at trial.
Her lawyer, Jose Baez, said JPMorgan performed extensive due diligence and knew how many clients Frank had before completing the purchase, but complained due to “buyer’s remorse.”
Baez said JPMorgan claimed it was hoodwinked only when the bank wanted to get out of its contract with Frank because financial aid regulations changed, and that fraud was the only condition that allowed it to back out.
Frank was founded in 2017. JPMorgan CEO Jamie Dimon has called the Frank acquisition a “huge mistake.”
Javice’s co-defendant, Olivier Amar, who was Frank’s chief growth officer, was also convicted on fraud and conspiracy charges.
In her opening statement, prosecutor Rushmi Bhaskaran said Amar bought “sham lists” of student data from third parties, which he and Javice could pass off as customers to JPMorgan.
“It was through their lies that they became multimillionaires,” Bhaskaran said.
(Reporting by Tatiana Bautzer and Luc Cohen in New York; Editing by Rod Nickel)
