Frank founder Charlie Javice is in talks with prosecutors to resolve charges she defrauded JPMorgan Chase & Co. in its $175 million acquisition of the college financial-planning site, according to court records.
(Bloomberg) — Frank founder Charlie Javice is in talks with prosecutors to resolve charges she defrauded JPMorgan Chase & Co. in its $175 million acquisition of the college financial-planning site, according to court records.
Javice, who faces criminal charges that include conspiracy, wire fraud affecting a financial institution and bank fraud, hasn’t yet entered a plea. Meanwhile she has had “discussions regarding a possible disposition of this case,” Assistant US Attorney Dina McLeod said in a filing disclosed publicly on Thursday.
In the filing, the US sought an extension of a May 3 deadline to bring an indictment against Javice, which was granted by the court. The talks “have not been completed and defense counsel and the government plan to continue our discussions,” McLeod said.
Read More: Frank Founder Javice Released on Bail in Alleged JPMorgan Scam
Javice’s lawyer JP Kernisan didn’t immediately respond to a phone call seeking comment on the filing.
Alex Spiro, another lawyer for Javice, said there are no plea talks and that “disposition means dismissal.”
‘Brazen Scheme’
Prosecutors say Javice engaged in “a brazen scheme to defraud” JPMorgan and “lied directly to JPMC and fabricated data to support those lies — all in order to make over $45 million from the sale of her company.” She was arrested April 3 and is free on a $2 million bond.
Javice founded Frank in 2017 as an online platform to help college students fill out the Free Application for Federal Student Aid, or Fafsa. Forbes named her to its “30 Under 30” list for finance in 2019.
In 2021 she started looking for a buyer for the site, beginning the acquisition process with JPMorgan and a bank that isn’t named in the criminal complaint against her. She told both banks that Frank had 4.25 million customers who had signed up for accounts, according to the government. In reality, the US claims, Frank had fewer than 300,000.
JPMorgan, which acquired Frank in 2021, sued Javice and another executive, Olivier Amar, in federal court in Delaware in December, alleging they used fake customer accounts to lead the bank into completing the deal by exaggerating the number of people using her site.
Big Data Sets
To cover up lies about Frank’s customers, Javice bought sets of data on 4.5 million college students on the open market, according to the lawsuit.
Amar wasn’t named as a defendant in the criminal complaint. In a bid to dismiss JPMorgan’s lawsuit, he said he wasn’t a party to the merger agreement and attended no more than one meeting with the bank before the deal.
Javice, who has sued JPMorgan in state court in Delaware to force the bank to cover her legal fees, argues it rushed to buy Frank without doing proper due diligence and was also trying to deflect attention from its violations of student privacy laws.
The case is US v. Javice, 23-mag-02638, US District Court, Southern District of New York (Manhattan).
–With assistance from Chris Dolmetsch.
(Adds arrest and bail in sixth paragraph.)
More stories like this are available on bloomberg.com
©2023 Bloomberg L.P.