Charlie Javice, the founder of the student loan application platform Frank, has been convicted of fraud following the sale of her startup to JPMorgan for $175 million. The jury reached a verdict after a five-week trial, siding with prosecutors who accused Javice of significantly exaggerating Frank’s customer base to deceive the bank during the acquisition process.
When JPMorgan acquired Frank in 2021, it was led to believe that the startup had 4 million customers. However, post-acquisition investigations revealed the actual figure was just 300,000. This discrepancy came to light when the bank dispatched marketing emails to purported Frank users, discovering that around 70% of these emails were undeliverable.
To substantiate her claims of a larger customer base, Javice allegedly enlisted a mathematics professor to produce fabricated data, which she then presented to JPMorgan in the run-up to the acquisition.
In her defence, attorneys argued that the lawsuit stemmed from JPMorgan’s buyer’s remorse linked to changes in government regulations on completing financial aid forms. Throughout the trial, Javice maintained her innocence and chose not to testify.
At 32 years old, Javice faces a potential prison sentence of several decades, with sentencing set to occur in August, as reported by CNBC. She founded Frank in 2017 and gained recognition in 2019 when she was included in Forbes’ prestigious 30 Under 30 list.
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