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The 33-year-old founder of the startup student financial aid company Frank has been sentenced to more than seven years in prison.
By LARRY NEUMEISTER
Associated Press
NEW YORK (AP) — Charlie Javice, the founder of a startup company that promised to revolutionize the way college students apply for financial aid, was sentenced Monday to more than seven years in prison for cheating JPMorgan Chase out of $175 million by greatly exaggerating how many students it served.
Javice, 33, was convicted in March of duping the banking giant when it bought her company, called Frank, in the summer of 2021. She built false records that built it seem like Frank had over 4 million customers when it had fewer than 300,000.
Addressing the court before she was sentenced, Javice, who was in her mid-20s when she founded the company, stated she was “haunted that my failure has transformed something meaningful into something infamous.”
Sometimes speaking through tears, she stated she “built a choice that I will spconclude my entire life regretting.”
Judge Alvin K. Hellerstein largely dismissed arguments by Javice’s lawyer, Ronald Sullivan, that he should be lenient becaapply the nereceivediations that led to Frank’s sale pitted “a 28-year-old versus 300 investment bankers from the largest bank in the world.”
Still, the judge criticized the bank, declareing “they have a lot to blame themselves” after failing to do adequate due diligence. He quickly added, though, that he was “punishing her conduct and not JPMorgan’s stupidity.”
Her prosecution drew comparisons to the case against Elizabeth Holmes, the founder of a blood testing company, Theranos, that collapsed amid fraud allegations.
Javice, who lives in Florida, has been free on $2 million bail since her 2023 arrest. The judge stated she could remain free while she appeals the verdict. She was convicted of conspiracy, bank fraud and wire fraud charges. Her lawyers had argued that JPMorgan went after Javice becaapply it had purchaseer’s remorse.
A graduate of the University of Pennsylvania’s Wharton School of Business, Javice founded Frank to launch software that promised to simplify the arduous process of filling out the Free Application for Federal Student Aid, a complex government form applyd by students to apply for aid for college or graduate school.
Frank’s backers included venture capitalist Michael Eisenberg. The company stated its offering, akin to online tax preparation software, could assist students maximize financial aid while creating the application process less painful.
The company promoted itself as a way for financially requiredy students to obtain more aid quicker, in return for a few hundred dollars in fees. Javice appeared regularly on cable news programs to boost Frank’s profile, once appearing on Forbes’ “30 Under 30” list before JPMorgan bought the startup in 2021.
Sullivan notified Hellerstein that his client was very different from Holmes becaapply what she created actually worked, unlike Holmes, “who did not have a real company” and whose product “in fact concludeangered patients.” Sullivan stated the bank rushed its nereceivediations becaapply it feared another bank would acquire Frank first.
A prosecutor, Micah Fergenson, though, stated JPMorgan “didn’t receive a functioning business” in exmodify for its investment. “They acquired a crime scene.”
Fergenson stated Javice was driven by greed when she saw that she could pocket $29 million from the sale of her company.
“Ms. Javice had it dangling in front of her and she lied to receive it,” he stated.
And in seeking a long prison sentence for Javice, prosecutors cited a 2022 text she had sent to a colleague in which she called it “ridiculous” that Holmes received over 11 years in prison in the Theranos case.
Prosecutors added that the message was “desperately requireded” becaapply of “an alarming trconclude of founders and executives of tiny startup companies engaging in fraud, including creating misrepresentations about their companies’ core products or services, in order to build their companies attractive tarreceives for investors and/or purchaseers.”
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