On Monday, authorities apprehended and indicted Charlie Javice, the ex-CEO of a student loan startup, for allegedly misrepresenting her company’s size in a $175 million fraud case. Javice, aged 31, faces charges of conspiracy to commit bank and wire fraud, one count of bank fraud, one count of wire fraud, and securities fraud for purportedly inflating the customer base of her startup, Frank, as stated by the Justice Department. She is accused of exaggerating customer numbers in an attempt to convince J.P. Morgan Chase (JPMC) to acquire her company for $175 million, from which she would have profited $45 million through fraudulent means.
Each charge of conspiracy to commit bank and wire fraud, bank fraud, and wire fraud carries a potential 30-year prison sentence, while securities fraud could result in up to 20 years, according to the Justice Department. U.S. Attorney Damian Williams commented on Javice’s alleged actions, claiming she deliberately deceived JPMC during a $175 million acquisition deal, fabricating data to support her lies and ultimately aiming to gain over $45 million from her company’s sale.
Williams emphasized that this arrest should serve as a warning to entrepreneurs who resort to dishonesty for their business’s success, as they will eventually face the consequences of their actions. The complaint states that Javice established Frank around 2017 as a platform assisting students in completing the Free Application for Federal Student Aid. In 2021, two major banks, including JPMC, expressed interest in acquiring the company. At this time, Javice reportedly informed them that Frank had 4.25 million customers or “users,” when the actual figure was fewer than 300,000.
Upon JPMC’s request for number verification, Javice is alleged to have falsified a data set. Special agent in charge Patricia Tarasca commented on the case, stating that it highlights the various ways in which banks can be defrauded. Tarasca affirmed the FDIC-OIG’s commitment to holding individuals responsible for compromising the integrity of financial institutions and expressed gratitude to their law enforcement partners for their diligent efforts in investigating such crimes.