Charlie Javice Arrested For Cooking Up Books To Defraud JP Morgan Chase

Charlie Javice, the founder of student loan aid company Frank, which was acquired by J.P. Morgan Chase for $175 million two years ago, is currently serving time in prison for fraud, having been accused of misleading the financial behemoth by exaggerating the number of clients her startups claimed to serve at the time of acquisition.

On Monday night, New Jersey police detained Charlie Javice (31) of Miami Beach, Florida on charges of conspiracy, wire fraud, and bank fraud.

Documents filed in the complaint in Manhattan Federal Court state that she knowingly made a false claim that her firm had over four million customers. In truth, there were fewer than 300,000 users of her startup.

Authorities accuse Javice, who was featured on Forbes' 2019 "30 Under 30" list, of acquiring $45 million from the scheme.

After posting bail for $2 million, Javice and her attorney left court without commenting. However, she is also subject to a curfew and, if necessary, electronic surveillance. Besides her mother and her boyfriend, Javice is not allowed to communicate with any of the other parties involved in the case.

U.S. Attorney Damian Williams accused Javice of "engaging in a brazen scheme" to defraud JP Morgan, the acquiring financial institution, by creating fictitious books to back up statements she made to inflate the price of her startup.

He added that other startup business owners and stakeholders should take the decision as a lesson and caution not to use similar tactics.

A criminal complaint alleges that in 2017, Javice established TAPD Inc. It was known as "Frank" when in operation. The FAFSA was designed to be filled out more quickly and easily through an online platform. College and graduate school applicants can use this form to apply for federal financial help.

The complaint alleges that in 2021, Javice attempted to sell her fledgling company while serving as its chief executive to the huge financial firm JP Morgan Chase (JPMC). She inflated the company's market share and customer base to pique JPMC's interest.

As part of their due diligence, JPMC checked into Javice's assertion that Frank had 4.25 million customers. She then requested that her director of engineering falsify data sets using simulated means, but she declined.

She then spent $105,000 on a market purchase of synthetic data with correct information on more than 4.25 million pupils and then engaged an outside data scientist to generate the dataset. Frank, however, did not clean the dataset she purchased, and it was missing many pieces of information that were necessary for JPMC to assess its veracity.

After Javice allegedly lied about Frank's user base of millions to get JPMC to buy the company, the SEC filed a civil action against them.

Javice was up to some good old-fashioned fraud instead of assisting students. She exaggerated Frank's success by saying it assisted millions of students with their federal student aid applications. She fabricated the data set to back up her assertion and then used it to persuade JPMC to enter a $175 million acquisition deal based on the fabricated data.

Several such cases have implicated Forbes cover subjects or other figures of praise, calling into doubt the magazine's credibility.

Notable cases include those of Elizabeth Holmes, founder of Theranos, Inc., who was recently sentenced to 11 years in prison for misleading investors and cooking her books; Ankiti Bose, founder of the Singapore-based business Zilingo; and Ashneer Grover and wife, founders of the Indian startup unicorn, BharatPe. Formerly considered the "next Warren Buffett," Sam Bankman-Fried, was recently apprehended in the Bahamas on criminal allegations brought by American authorities.