Seven-year sentence for startup founder who defrauded JPMorgan
Charlie Javice built Frank as a financial aid tool, but prosecutors say she sold it on fabricated data.
Charlie Javice, the entrepreneur convicted for defrauding JPMorgan Chase into buying her college financial aid startup Frank for $175 million, was sentenced on Monday to just over seven years in prison.
U.S. District Judge Alvin Hellerstein handed down the sentence at a hearing in Manhattan federal court.
Javice, 33, was convicted in March on all four counts she faced: bank fraud, securities fraud, wire fraud and conspiracy.
She had pleaded not guilty and is expected to appeal her conviction. Prosecutors with the Manhattan U.S. Attorney's office had sought a 12-year prison sentence.
Javice founded Frank in 2017, and won praise for simplifying college financial aid for students and parents.
She became a rising star in finance, and appeared on Forbes magazine's "30 Under 30" list in 2019.
JPMorgan bought Frank in September 2021, but found itself unable to email much of Javice's claimed customer base, and concluded she faked her customer list.
Prosecutors said Javice claimed she had 4.25 million customers, but the real number was closer to 300,000. JPMorgan CEO Jamie Dimon called buying Frank a "huge mistake."
Lawyers for Javice sought a prison term significantly shorter than 12 years, calling her "lapse of judgment" an aberration and the harm to JPMorgan inconsequential.
Javice added prominent appellate lawyer Alexandra Shapiro to her legal team this month.
Shapiro's other clients include hip-hop mogul Sean "Diddy" Combs, who is expected to appeal his conviction on prostitution-related charges, and cryptocurrency executive Sam Bankman-Fried, who is appealing his fraud conviction and 25-year prison sentence.
Javice's co-defendant Olivier Amar, who was Frank's chief growth officer, was convicted on the same counts as her. His sentencing is scheduled for October 20.
A courtroom battle over due diligence
Javice’s defense, led by high-profile attorney Jose Baez, argued that JPMorgan had conducted extensive due diligence before finalizing the acquisition and that the fraud allegations were merely an excuse for the bank to back out of the deal. Baez contended that regulatory changes had made Frank less valuable to JPMorgan, leading to what he described as "buyer’s remorse."
"JPMorgan knew how many clients Frank had before completing the purchase," Baez told the jury. "The fraud claim only came when they wanted to escape the contract."
Amar’s defense took a different approach, portraying him as a peripheral figure in the alleged fraud. His attorney, Sean Buckley, said after the verdict, "He intends to continue to fight these charges."
Charlie Javice interview with CTech in 2020
(live4u)
