Startup Founder Convicted for $175 Million Fraud Against JPMorgan Chase

Charlie Javice, the founder of a once-promising startup, was found guilty Friday of defrauding JPMorgan Chase & Co. JPM to the tune of $175 million.

What Happened: Javice, the brain behind Frank, a startup that aimed to streamline the student financial aid application process, was convicted of defrauding JPMorgan Chase.

The judgement followed a five-week trial held in a federal court in Manhattan.

Javice, along with her co-defendant Olivier Amar, was found guilty on all four charges listed in the indictments, including conspiracy, bank fraud, and wire fraud. These charges could potentially lead to a 30-year prison sentence.

According to the report by the Associated Press, the indictment accused Javice of inflating her client base by a factor of ten, which led to JPMorgan’s acquisition of her startup in 2021. During the trial, bank executives testified that Javice had falsely claimed to have a client base of over four million, a figure that was later found to be grossly overstated.

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The defense has requested the judge to overturn the verdict, arguing that the evidence presented was insufficient to uphold the conviction. The judge is expected to consider these arguments next week.

Acting Manhattan U.S. Attorney Matthew Podolsky said, “While Javice and Amar may have thought that they could lie and cheat their way to a huge payday, their lies caught up with them, and they now stand convicted by a jury of their peers.”

Javice, who has been out on a $2 million bail since her arrest in 2023, is set to be sentenced on July 23.

Why It Matters: This case serves as a stark reminder of the risks associated with startup acquisitions. It underscores the need for thorough due diligence and stringent verification of claims made by startups, particularly regarding their customer base.

The conviction of Javice and Amar is a significant development, highlighting the severe legal consequences of fraudulent practices.

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