Charlie Javice appeared to be living every 20-something founder’s dream when she sold her financial aid startup Frank to JPMorgan Chase for $175 million in 2021.
However, the acquisition has turned into a nightmare for Javice, who was arrested and charged by the US Securities and Exchange Commission on Monday night for allegedly defrauding JPMorgan Chase, according to CNN Business.
The bank sued Javice in December, accusing her of fabricating a list of four million users with the assistance of a professor and artificial intelligence. According to The Wall Street Journal, Javice claimed the bank was attempting to cover up its own failed strategy and countersued for damages and $27.9 million in compensation she claims she is owed.
The SEC claimed in a complaint filed in New York District Court that Javice misled JPMorgan Chase into believing her app had 4.25 million users when it actually had fewer than 300,000. Through the 2021 sale, Javice stole “$9.7 million directly in stock proceeds, millions more indirectly through trusts, and a contract entitling her to a $20 million retention bonus,” according to the SEC’s investigation.
“Rather than assisting students, we allege that Ms. Javice engaged in old-school fraud: she lied about Frank’s success in assisting millions of students navigate the college financial aid process by inventing data to back up her claims, and then used that fabricated information to induce JPMC to enter into a $175 million transaction,” said Gurbir S. Grewal, director of the SEC’s division of enforcement.
Javice faces decades in prison if convicted of one count of conspiracy to commit banking and wire fraud, one count of wire fraud, one count of bank fraud, and one count of securities fraud.