Former Frank CEO Charlie Javice has been charged with defrauding JPMorgan Chase after the financial institution acquired her monetary assist startup for $175 million in 2021. In a complaint filed on Tuesday, the Department of Justice accuses the fintech founding father of “falsely and dramatically inflating” the variety of shoppers her startup served to “fraudulently induce” JPMorgan Chase into buying the corporate.
The 31-year-old Javice, who was included in Forbes’ 30 under 30 list in 2019, created Frank in 2016 with the said purpose of simplifying the monetary assist course of for college kids and maximizing the quantity of assist they obtained.
A listing of 4.25 million customers allegedly comprises fewer than 300,000 actual accounts
Javice later turned a managing director at JPMorgan Chase following Frank’s acquisition and was allegedly set to obtain over $45 million because of the sale.
Federal prosecutors are charging Javice with one rely of conspiracy to commit financial institution and wire fraud, one rely of wire fraud affecting a monetary establishment, and one rely of financial institution fraud. Whereas these three expenses every carry a most sentence of 30 years behind bars, she’s additionally charged with securities fraud, which comes with a 20-year most sentence. Javice with arrested on Monday evening and later released on a $2 million bond.
Earlier this yr, JPMorgan Chase shut down Frank, filing a lawsuit in opposition to Javice and Frank government Olivier Amar after allegedly realizing that the general public on the startup’s listing of customers have been pretend. In accordance with the financial institution’s go well with, Javice employed an information scientist to manufacture a consumer information set with 4.25 million college students, when, in truth, the startup had lower than 300,000 actual customers. Javice can be accused of buying an information set containing 4.5 million precise school college students in an try and fill out Frank’s database following JPMorgan Chase’s acquisition. Javice has denied the allegations and is countersuing for reputational hurt.
“As alleged, Javice engaged in a brazen scheme to defraud JPMC in the midst of a $175 million acquisition deal,” US Legal professional Damian Williams says in an announcement. “She lied on to JPMC and fabricated information to assist these lies — all with a purpose to make over $45 million from the sale of her firm.”