‘It was through their lies that they became multimillionaires’: Charlie Javice fraud trial opens
Prosecutors claim Javice and her Israeli co-defendant Olivier Amar faked user data, while her lawyers blame JPMorgan, which bought their college financial aid startup, Frank, for $175 million.
The criminal trial of Charlie Javice, the young entrepreneur accused of defrauding JPMorgan Chase into buying her college financial aid startup, Frank, for $175 million, began last Thursday in Manhattan federal court. Javice, once celebrated as a rising star in fintech and featured on Forbes’ "30 Under 30" list, is facing charges of securities fraud, wire fraud, bank fraud, and conspiracy. The case hinges on allegations that she fabricated customer data to inflate the value of her company before selling it to the largest bank in the United States.
The Allegations
Prosecutors allege that Javice falsely claimed Frank had 4.25 million student customers when, in reality, the number was closer to 300,000. According to Rushmi Bhaskaran, the prosecutor leading the case, Javice procured fake names and addresses with the help of a college friend to meet JPMorgan’s due diligence requirements. Additionally, her co-defendant, Israeli Olivier Amar, Frank’s former chief growth officer, allegedly purchased lists of sham student data from third parties to further the deception. "It was through their lies that they became multimillionaires," Bhaskaran told jurors in her opening statement.
The alleged scheme unraveled when JPMorgan attempted to market its products to Frank’s supposed customer base. The bank reportedly received significantly fewer responses than expected, prompting an internal investigation that exposed the alleged fraud. JPMorgan has since shuttered Frank and CEO Jamie Dimon has publicly called the acquisition a "huge mistake."
The Defense’s Argument
Javice, now 32, has pleaded not guilty, maintaining that JPMorgan was fully aware of Frank’s actual customer base before completing the acquisition in July 2021. Her attorney, Jose Baez, argued that the bank had conducted extensive due diligence and only raised fraud allegations as an excuse to back out of the deal after financial aid regulations changed, rendering Frank less valuable. "This is nothing more than buyer’s remorse," Baez asserted in his opening statement.
Amar’s defense has taken a different approach, portraying him as a bystander to the alleged deception. His lawyer, Jonathan Cogan, told the court that Amar was "out of the loop" during the acquisition talks and had no direct involvement in misleading JPMorgan.
A Broader Legal Battle
Beyond the criminal trial, the case has sparked a broader legal battle between Javice and JPMorgan. The bank sued both Javice and Amar in December 2022, accusing them of fraud and misrepresentation. Javice, in turn, countersued, claiming JPMorgan wrongfully terminated her and owes her millions of dollars in severance. She and Amar have also sued the bank in Delaware Chancery Court to recoup their legal fees.
A Cautionary Tale in Fintech
Javice’s trial is being closely watched as a cautionary tale of fintech’s high-stakes world, where rapid growth and high valuations can sometimes obscure due diligence. Frank, founded in 2017, was marketed as a groundbreaking tool to help students navigate the financial aid process. Its rapid rise and high-profile sale to JPMorgan underscored the bank’s eagerness to expand in the student loan space—only for the deal to collapse in scandal.
As the trial unfolds before U.S. District Judge Alvin Hellerstein, the case will test the limits of corporate due diligence, the credibility of fintech valuations, and the consequences of alleged deception in high-profile acquisitions. If convicted, Javice could face a lengthy prison sentence, marking a dramatic fall from grace for a once-promising entrepreneur.
Reuters contributed to this report
Charlie Javice interview with CTech in 2020
(live4u)
