Frank founder Charlie Javice, who allegedly defrauded JPMorgan out of $175 million, hit with federal charges

• Charlie Javice, who sold her student-aid startup Frank to JPMorgan Chase, was charged with fraud.
• The bank claimed Javice faked millions of customers to convince it to buy Frank for $175 million.
• An Insider investigation found that Javice has a pattern of exaggerating her success.

Charlie Javice, the 31-year-old founder of financial aid startup Frank, has been charged by federal prosecutors with financial fraud after JP Morgan Chase & Co. alleged in a civil suit last year that Javice had faked millions of Frank customers to convince the bank to buy her company for $175 million.

Federal prosecutors in Manhattan charged Javice with wire fraud affecting a financial institution, securities fraud, bank fraud and conspiracy on Tuesday. They said she was arrested Monday night in New Jersey.

The Securities and Exchange Commission also laid civil fraud charges against Javice on Tuesday, with Director of the Division of Enforcement Gurbir S. Grewal alleging that Javice engaged in "old school fraud."

The criminal charges have a maximum sentence of 30 years, but defendants in federal fraud cases are typically sentenced to much less than the maximum sentence. 

"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," US Attorney Damian Williams said in a statement on Tuesday.

Javice's attorney in the civil case, Alex Spiro, declined to comment.

Spiro previously told Insider that Javice disputes the bank's claims. Javice filed her own suit against the bank asking it to advance her legal fees, and alleging JPMorgan fired her "in bad faith" to avoid having to pay a $20 million retention bonus.

Javice has a pattern of exaggerating her success, an Insider investigation found. As a teenager, the young entrepreneur rose to acclaim as the founder of a microfinance startup that raised $300,000 but never disbursed a loan. 

It's also unclear how Frank could have accomplished some of what it claimed to do on behalf of students. The startup has said its users received an average of $28,000 in financial aid, roughly twice the average amount of aid awarded to college students, and that Frank could get students "thousands off their tuition." A college-aid expert who spoke to Insider said those claims were dubious.  

JPMorgan acquired Frank in 2021 for $175 million, but began to question the authenticity of the startup's purported 4 million users after an email marketing campaign ended in "disaster," according to the bank's lawsuit and a filing by prosecutors. Out of 400,000 emails sent to Frank users, more than 70% bounced back and only 103 were opened, the bank claimed.

An internal investigation revealed that Javice and Frank chief growth officer Olivier Amar — referred to as "CC-1" in the federal charges — paid a New York data science professor $18,000 to create nearly 4 million fake accounts in order to juice Frank's user numbers, JPMorgan alleged in its lawsuit. Amar later bought a list of student email addresses from a marketing firm for $105,000 in order to make those accounts seem more credible, JPMorgan alleged.

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