NEW YORK (AP) — Charlie Javice, the charismatic founder of a startup company that claimed to be revolutionizing the way college students apply for financial aid, was convicted on Friday of defrauding one of the largest U.S. banks, JPMorgan Chase, out of $175 million by exaggerating her customer base by 10 times.
A jury in New York City returned its verdict after a five-week trial. Javice, 32, faces the possibility of a lengthy prison term. She appeared sullen at the defense table as the verdict was read. A lawyer placed her hand on Javice’s back.
Javice was in her mid-20s when she founded Frank, a company with software that promised to simplify the process of filling out the Free Application for Federal Student Aid, a complex government form used by students to apply for aid for college or graduate school.
The company promoted itself as a way for financially needy students to obtain more aid faster, in return for a few hundred dollars in fees. Javice appeared regularly on cable news programs to boost Frank’s profile, once appearing on Forbes’ “30 Under 30” list before JPMorgan bought the startup in 2021.
JPMorgan executives testified that she told them she had over four million clients and would have about 10 million by year’s end, but it turned out there were only about 300,000 customers.
Javice’s lawyer, Jose Baez, told the jury that JPMorgan knew what it was getting in the deal, and made up the fraud allegations due to buyer’s remorse after government regulatory changes made the data it received in the deal useless to its hopes of gaining new young customers.
Defense lawyers asked the judge to set aside the verdict, arguing the evidence was not sufficient to sustain the conviction. The judge said he would hear arguments on that at a later date, and sentencing was set for July 23.
Also convicted Friday was Olivier Amar, effectively the company’s No. 2 and who as chief growth and acquisition officer padded the customer list given to JPMorgan, according to prosecutors.
Javice was among a number of young tech executives who vaulted to fame and media accolades with supposedly disruptive or transformative companies, only to see their businesses collapse amid questions about whether they had engaged in puffery and fraud while dealing with investors.
She founded the company not long after graduating from the University of Pennsylvania’s business school, telling interviewers she was motivated to dive into helping college students connect with financial resources because of her own frustrations navigating the process of getting financial aid.