Charlie Javice, 32, founder of a student-finance startup called Frank, was found guilty of defrauding JPMorgan Chase & Co. on Friday.
Following the bank’s $175 million acquisition of the tool designed to help students fill out their Free Application for Federal Student Aid (FAFSA) in 2021, Chase determined that Javice had lied about the platform’s user base. She claimed that Frank had more than 4.25 million users when it actually had fewer than 300,000.
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The University of Pennsylvania Wharton School graduate, who was named on Forbes magazine’s 2019 “30 under 30” list, claimed that Frank was on track to have 10 million users by the end of 2021, testified JPMorgan executive Wims Morris during the trial. To meet that number, Frank’s former engineering chief, Patrick Vovor, told the court that he was approached by Javice to create fake users.
Vovor refused the request, so Javice turned to Adam Kapelner, a data scientist she knew from Wharton.
During the trial, Kapelner testified that he was paid $18,000 to create data for Javice, but didn’t know what she was using it for. He used a process that created millions of users that incorporated information provided by real ones.
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As Bloomberg reports, when Kapelner was asked on the stand about a user named “Katherine Gordy,” whose home address, phone number, email, and other details were in the user database, Kapelner replied, “Ms. Gordy does not exist.”
After JPMorgan sent out an offer for banking services to Frank’s supposed 4.25 million users only brought in 10 new checking account customers, “red flags” were raised, according to a JPMorgan marketing executive. That began a process that eventually shut down the platform and began a criminal investigation.
Javice and her co-defendant, Olivier Amar, Frank’s former chief growth officer, were both convicted on four counts: conspiracy, wire fraud, securities fraud, and bank fraud.
Per Bloomberg, Javice faces a maximum prison term of 30 years for the most serious charge, bank fraud, but legal experts predict she’ll receive a lower sentence. FTX co-founder Sam Bankman-Fried, who was also once named on Forbes’ “30 under 30” list, is currently serving a 25-year sentence for carrying out one of the biggest financial frauds in U.S. history.
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