Charlie Javice, Founder of Frank, Faces Fraud Trial in JPMorgan Case
Charlie Javice, the founder of student-aid startup Frank, is set to stand trial for fraud following the sale of her company to JPMorgan Chase & Co. The trial, which is expected to last four weeks in Manhattan federal court, comes after allegations that Javice and Frank executive Olivier Amar inflated the company’s user base figures.
An email from Javice’s legal team at Quinn Emanuel Urquhart & Sullivan has advised colleagues to avoid discussing the case at work to prevent Javice from overhearing. The defense team includes lawyers from Quinn Emanuel, Mintz, Harvard law professor Ronald Sullivan Jr., and criminal defense attorney Jose Baez.
Javice founded Frank in 2017, gaining recognition and a spot on the Forbes 30 Under 30 list. JPMorgan purchased the company for $175 million in 2021, aiming to access its purported user base. However, suspicions arose when JPMorgan later questioned the accuracy of the reported user numbers.
In January 2023, JPMorgan filed a lawsuit against Javice and Amar, alleging they used “synthetic data” to fabricate millions of non-existent customers. Subsequently, the Justice Department and securities regulators filed complaints against Javice for wire fraud and bank fraud.
US District Judge Alvin K. Hellerstein has denied requests for separate trials for Javice and Amar. The judge has also barred references to Theranos or Elizabeth Holmes during the proceedings and restricted prosecutors from introducing certain WhatsApp messages between the defendants.
The prosecution has requested limits on public commentary from Javice’s legal team after a spokesperson’s comments to the Financial Times suggested that public articles could counter claims of inflated user numbers. Prosecutors argued that such statements could potentially influence potential jurors.
Both Javice and Amar face serious charges, with bank fraud carrying a potential sentence of up to 30 years. The defendants have pleaded not guilty to all charges. Javice has been out on a $2 million bond in Miami while awaiting trial.
As the trial unfolds, it will likely shed light on the alleged fraudulent practices and their impact on JPMorgan’s acquisition of Frank. The case serves as a reminder of the importance of due diligence in high-profile acquisitions and the potential consequences of misrepresenting company data.
