ABC News reported that an entrepreneur accused of exaggerating her college financial planning business's value in order to sell it to JPMorgan Chase pleaded not guilt to federal fraud charges.
Charlie Javice, who was once on Forbes' "30 Under 30" list as a "big money" entrepreneur, sold her now-defunct tech startup in 2021 to the bank for $175 million – millions of dollars above the company's value, federal prosecutors stated last month, after Javice had been arrested.
U. S. Attorney Damian Williams stated last month, following Javice’s arrest, that this should serve as a warning for "entrepreneurs who lie in order to advance their business [and] their lies will catch them up."
According to documents cited in a complaint, representatives of the financial institution were fascinated by Frank's model. The software would allow students to apply for federal financial assistance in less than seven minutes. Javice's technology would streamline the FAFSA (Free Application for Federal Student Aid). The company claimed that once the form was completed, it would take only a single click.
Javice informed the bank that Frank had about four million users. Prosecutors said that Frank had fewer than 300,000 users at the time.
Before JPMorgan Chase agreed on purchasing Frank, the bank asked for data to verify the number of users. Javice then asked her director of engineering to fabricate data, according to prosecutors.
Prosecutors said that when he refused, she hired an outside data scientist to create a four-million-row spreadsheet, one row for each account. The rows contained the names and email addresses of those that the company claimed to have signed up.
JPMorgan Chase completed the acquisition by paying Javice $175 million total for her equity stake and $21 million to Javice. Janice was hired by JPMorgan Chase to continue working after the transaction for an additional $20 million.
During Javice's tenure at the company, prosecutors claim that she successfully purchased another set of data containing real student names. Prosecutors said that when JPMorgan Chase tried to launch a campaign for those they believed had signed up for Frank they found some missing data points.
Javice's guilty plea comes a week before Elizabeth Holmes, a fellow startup founder, who is 39, reports to prison for an 11-year sentence. Holmes was convicted of defrauding investors in 2022 about her blood-testing technology. She claimed that it could run any test using a single drop.
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