Startup CEO charged in $175 million fraud case

The young CEO is said to have manufactured much of the company’s user base.

A tech start-up CEO once considered a top U.S. entrepreneur has been arrested and charged with fraud for allegedly lying to JP Morgan Chase, the Justice Department announced Tuesday.

Charlie Javicepreviously billed as a Forbes magazine “30 Under 30” winner, was arrested Monday night in New Jersey for lying about the number of customers her company was serving with its student loan assistance program, according to the DOJ.

“She directly lied to JPMC and fabricated data to back up those lies — all in an effort to earn over $45 million from the sale of her business,” U.S. attorney Damian Williams said in a statement. . statement. “This arrest should put entrepreneurs who lie to advance their businesses on notice that their lies will catch up with them, and this Bureau will hold them accountable for putting their greed above the law.”

A spokeswoman for Javice said she denies the allegations and her lawyer declined to comment.

Charlie Javice, of Miami Beach, Florida, leaves federal court in Manhattan, April 4, 2023, in New York after signing $2 million bond to remain free on charges of tricking JP Morgan Chase with fake records to acquire Frank, his student loan assistance startup, for $175 million. Prosecutors say she claimed her business had more than 4 million customers when it had less than 300,000 customers.

Laurent Neumeister/AP

The company, Frank, had been touted as a way to simplify the student loan application process. Javice is accused of fabricating data to make it look like the platform had millions more users in order to sell the company for $175 million.

She is charged with one count of conspiracy to commit bank and wire fraud, one count of wire fraud affecting a financial institution and one count of bank fraud, each carrying a maximum sentence of 30 years in prison. prison. She also faces one count of securities fraud, which carries a maximum sentence of 20 years in prison.

Javice enlisted the help of a data scientist to create a fake database that was used to convince JP Morgan Chase that the platform had more than 4.25 million users, according to billing documents. The tech CEO also allegedly bought real data on 4.25 million students that she tried to impersonate as her user data.

Javice made her first court appearance on Tuesday, and she was released on a $2 million bond that limits her to parts of New York and South Florida.

ABC News’ Luke Barr and Lisa Sivertson contributed to this report.

Leave a Comment