JPMorgan’s case against fintech startup CEO goes to trial

JPMorgan Chase’s criminal lawsuit against Charlie Javice, the Forbes “30 Under 30” honoree who allegedly defrauded the banking giant into purchasing her student loan-aiding startup Frank for $175 million in 2021, is heading for trial today.

At one point, JPMorgan CEO Jamie Dimon even called the acquisition a “huge mistake.”

What happened?
Javice started Frank when she was 24 years old. The fintech platform helped collegegoers apply for student aid. JPMorgan eyed acquiring the company for its user base of young students who could be future customers of the bank.

As part of the deal, Javice pocketed $21 million for her stake in the company and was set to receive a $20 million retention bonus. 

She is accused of faking user data to convince JPMorgan that Frank had 4.25 million student customers when the actual number was just 300,000. The bank found this out after the sale when it sent marketing emails to 400,000 Frank customers, and just 28% of them were delivered to the mail IDs.

JPMorgan’s lawsuit claims Javice and Frank’s chief growth officer, Olivier Amar, paid “a data science professor at a New York City area college” to falsify and show that the company had millions of users.

Javice’s defense argues JPMorgan regretted the deal and pressured prosecutors into pursuing criminal charges.

The trial, expected to last four weeks, places Javice alongside convicted young startup founders like FTX’s Sam Bankman-Fried and Theranos’ Elizabeth Holmes.