The CEO of a startup acquired by JPMorgan Chase in 2021 will spend seven years behind bars for fraudulently inducing the banking giant to purchase her company.
In a statement, the U.S. Attorney’s Office for the Southern District of New York says that Charlie Javice was sentenced to 85 months in prison on Monday.
The startup founder was charged with tricking JPMorgan into buying Frank, a for-profit company that she established sometime in 2017 to serve as an online platform for simplifying the process of filling out the Free Application for Federal Student Aid (FAFSA).
With the aim of selling Frank to a larger financial institution in 2021, Javice falsely claimed to JPMorgan and another major bank interested in the startup that the financial aid platform had 4.25 million users when in reality it only had about 300,000.
JPMorgan sought to verify the number of Frank’s users and the amount of data collected about them before proceeding with the acquisition but Javice and Frank’s Chief Growth Officer Olivier Amar fabricated a data set consistent with the claim that the startup had millions of users. The duo also sought to purchase on the open market the real data of over 4.25 million college students to cover up their misrepresentations.
The bank eventually agreed to purchase Frank for $175 million.
Javice and Amar were convicted of conspiracy, wire fraud, bank fraud and securities fraud following a six-week jury trial in March
Says Attorney for the United States Amanda Houle,
“Javice perpetrated a $175 million fraud—repeatedly lying about the success of her startup company and even hiring a data scientist to create fake data to back up her lies. For that, Javice has been sentenced to 85 months’ imprisonment and ordered to pay over $300,000,000.”
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