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- Charlie Javice has been sentenced for tricking JPMorgan into paying $175M for her fintech startup.
- Javice was convicted of fraud in March for lying that her website, Frank, had 4 million Gen-Z users.
- In fact, her student financial aid platform never had more than 300,000 users.
A Manhattan federal judge has sentenced Charlie Javice to 7 years in prison for using wildly exaggerated user data to trick the country’s biggest bank, JPMorgan Chase, into paying $175 million for her student financial aid startup, Frank.
Javice’s prison sentence will be followed by 3 years of supervised release, resulting in a total 10-year sentence.
The former fintech wunderkind — an alum of Forbes’ 30 Under 30 list, she scored a one-on-one meeting with JPMC’s powerful CEO, Jamie Dimon, during the 2021 sale negotiations — may also pay restitution.
US District Judge Alvin Hellerstein said Javice’s crimes “required a great deal of duplicity,” but that she was “a good person who has done good deeds.”
“I don’t think you will be committing any crimes, and I think you will be devoting your life to service,” Hellerstein told Javice. “But others need to be deterred.”
Javice was convicted in March of conspiracy, wire, and bank fraud for using bogus user-base data to claim Frank — a platform that streamlined the federal financial aid application process, along with offering career and financial advice — had stockpiled the contact information for 4 million users. In fact, Frank never had more than 300,000 users.
Fighting back tears at Monday’s sentencing hearing, Javice, who is 32, said she wishes she could tell her younger self to take a different path.
“At 28, I did something that runs against the grain of my upbringing and every lesson I once claimed to have learned,” she said.
She implored forgiveness from JP Morgan investors whom she defrauded and from Frank employees and investors “whose name, career, or future was in some way stained by proximity to me.”
“Not a day goes by that I do not replay my mistakes, searching for meaning,” Javice said. “Not a day passes that I do not feel profound remorse.”
Prosecutors in the US Attorney’s Office for the Southern District of New York had sought a 12-year prison sentence and $300 million in restitution.
The hefty sum would compensate for the “enormous victim loss,” prosecutors argued.
Prosecutors said Javice pocketed $29 million of the $175 million Frank sale herself, while her defense lawyers put the figure closer to $21 million.
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JPMorgan Chase had seen great marketing potential in Frank’s massive database of 4 million users, according to trial testimony. The bank wanted to use the contact information to pitch checking accounts, credit cards, and other banking products to college-age users at the start of their lifelong financial journeys.
“Based on the defendant’s lies, JPMC projected it could generate more than $500 million in revenue from selling banking products to Frank’s customers,” prosecutors argued.
“Had JPMC known the truth — that Frank had only a few hundred thousand users — the bank would not have acquired Frank,” they wrote.
Javice had hoped to get a break in both prison time and restitution by admitting wrongdoing and trying to convince the judge that the JPMorgan Chase-Frank merger was not a complete loss for the bank.
“Regardless of the number of users, Frank had real value,” her lawyers argued pre-sentencing.
Hellerstein had little patience with an argument from Javice’s lawyers that he should take into account JPMorgan’s mistake in buying Frank. According to Javice’s attorney, Ronald Sullivan Jr., JPMorgan made a mistake by rushing to purchase the startup before any competitors could buy it.
“A fraud remains a fraud whether you outsmart someone who is smart or someone who is a fool,” Hellerstein said.
Hellerstein also rebutted Javice’s claim that she deserved a sentencing break for admitting she did something wrong.
“She said she made a mistake,” the judge said of her letter to him. “She doesn’t admit she committed a crime. I don’t think it’s an acceptance of responsibility.”
In Monday’s sentencing hearing, Sullivan praised Javice’s good deeds that “were not in the newspapers” and implored the judge to take them into consideration.
According to Sullivan — citing a sheaf of letters from family, friends, and acquaintances who wrote to support Javice — the Frank founder assisted seriously ill family members, quietly paid grocery bills for people who were struggling, and gave opportunities to people who are traditionally excluded from certain career paths. He asked for 18 months of prison time.
“We think that that is more in line with what is fair for a woman who has done good for most of her life,” Sullivan said.
This is a developing story; please check back for updates.
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