The Department of Justice announced Tuesday that the CEO of a digital startup who was previously regarded as a leading American businessperson had been detained and charged with fraud for allegedly defrauding J.P. Morgan Chase.
According to the DOJ, Charlie Javice was detained in New Jersey on Monday night for lying about the number of clients her business served with its student loan aid program. Javice had previously been recognized as one of Forbes magazine’s “30 Under 30” honorees.
In a statement, U.S. Attorney Damian Williams stated, “She lied directly to JPMC and created data to back those lies — all to collect over $45 million from the sale of her firm.” This arrest should serve as a warning to business owners who lie to promote their enterprises that their lies will come back to haunt them and that this Office will hold them accountable for transgressing the law out of their own self-interest.
Javice rejects the accusations, according to a representative for her, and her attorney declined to comment.
The company, Frank, had been promoted as a means to make the application procedure for student loans simpler. In order to sell the business for $175 million, Javice is accused of falsifying statistics to make it seem as though the platform had millions more users.
She faces three counts against her, each carrying a potential penalty of 30 years in prison: one count of conspiracy to commit bank and wire fraud, one count of wire fraud affecting a financial institution, and one offense of bank fraud. Also, she is charged with one count of securities fraud, which carries a maximum 20-year jail term.
According to criminal documents, Javice utilized a data scientist to build a fictitious database that was intended to persuade JP Morgan Chase that the platform had more than 4.25 million members. Also, the tech CEO allegedly paid real money for 4.25 million college students’ data, which she attempted to pass off as her own user information.
Javice made her initial court appearance on Tuesday, after which she was granted a $2 million bond limiting her to specific regions of southern Florida and New York.