Former NYC Start-Up CEO Charged In $175 Million Fraud, Feds Say

NEW YORK CITY, NY — The founder of college-financial-planning platform Frank has been charged with defrauding JPMorgan Chase of $175 million, the U.S. Attorney’s Office announced Tuesday.

Charlie Javice, 31, who appeared on the Forbes 2019 “30 Under 30” list, was arrested in New Jersey Monday night, New York federal prosecutors said.

Javice stands accused of "falsely and dramatically" inflating the number of Frank's customers to induce J.P. Morgan Chase to acquire the start-up for $175 million, officials said.

Prosecutors contend Javice stood to gain over $45 million from the fraud.

"This arrest should warn entrepreneurs who lie to advance their businesses that their lies will catch up to them, and this Office will hold them accountable for putting their greed above the law," U.S. Attorney Damian Williams said in the news release.

Javice founded Frank—a for-profit company that offered an online platform designed to simplify the process of filling out the Free Application for Federal Student Aid— around 2017.

Around 2021, Javice began to pursue the sale of Frank to a larger financial institution, and when JPMorgan and another bank expressed interest and began the acquisition process, Javice repeatedly told the banks that Frank had 4.25 million customers or “users," despite having less than 300,000, officials said.

To help verify the number of Frank's users when JPMorgan sought more information, Javice and a co-conspirator asked Frank's director of engineering to fabricate false data, while emphasizing that "we don’t want to end up in orange jumpsuits,” officials said. Concerned about the legality of the request, the director of engineering denied it, officials said.

As a backup plan, Javice approached an outside data scientist and hired him to create the false data, according to officials. Then Frank sealed the deal with JPMorgan.

Javice is charged with one count of conspiracy to commit bank and wire fraud, one count of wire fraud affecting a financial institution, and one count of bank fraud, each of which carries a maximum sentence of 30 years in prison, and one count of securities fraud, which carries a maximum sentence of 20 years in prison.

She is set to appear before U.S. Magistrate Judge Barbara Moses Tuesday.

According to her LinkedIn profile, Janice received her Bachelor of Science from The Wharton School of business in 2013.