TITLE: Frank Founder Sentenced to 7 Years for JPMorgan Fraud Scheme
Frank Founder Receives Prison Sentence for $175 Million Fraud
Charlie Javice, the founder of financial aid startup Frank and a former Forbes 30 Under 30 honoree, has been sentenced to seven years in prison for defrauding JPMorgan Chase during the bank’s acquisition of her company. The sentencing concludes a significant case that has drawn attention to due diligence practices in fintech acquisitions.
Misrepresented Customer Data Leads to Federal Charges
JPMorgan Chase acquired Frank in 2021 for $175 million, relying on Javice’s representation that the startup served 4 million students. Federal investigators later discovered the company actually had only approximately 300,000 customers—a discrepancy of more than 90%. This dramatic inflation of user numbers formed the basis of the fraud charges against Javice.
Fabricated Data Scheme Uncovered During Investigation
During the trial, testimony revealed that Javice attempted to create false user data to support her claims. When a Frank engineer refused to participate in creating synthetic data, Javice enlisted a mathematics professor to generate fabricated customer information. This evidence proved crucial to the prosecution’s case, demonstrating deliberate deception rather than simple exaggeration.
Substantial Financial Restitution Ordered
Along with her seven-year prison term, Javice and co-defendant Olivier Amar, Frank’s former chief growth officer, have been ordered to pay $278.5 million in restitution. The case highlights the serious consequences of misrepresentation in business transactions, particularly when dealing with major financial institutions.
Due Diligence Questions Emerge from Acquisition
The case has raised important questions about acquisition practices in the fintech sector, particularly regarding how JPMorgan Chase’s due diligence process failed to uncover the massive discrepancy in Frank’s actual customer numbers before completing the $175 million purchase. For additional coverage of this developing story, readers can reference the original reporting on this case.
The sentencing serves as a stark reminder that misrepresenting business metrics—even in the fast-moving tech sector—carries severe legal consequences that can include substantial prison time and financial penalties.