- Frank Founder Charlie Javice has pleaded not guilty to federal fraud charges.
- Javice is accused of grossly exaggerating the numbers of customers she had before her sale to JP Morgan.
- Javice’s former employee, Olivier Amar, is also charged in the scheme.
Charlie Javice, the millennial tech founder accused of defrauding JP Morgan Chase out of $175 million, appeared in federal court in Manhattan on Thursday morning along with her former employee who is also charged in the scheme.
Olivier Amar, who was chief growth officer at Frank, pleaded not guilty to helping Javice fabricate millions of customers for their startup company, which purported to help college students secure financial aid.
“Mr. Amar was chief growth officer, effectively the number two of the company,” Assistant U.S. Attorney Micah F. Fergenson said in court Thursday.
Javice, 31, also pleaded not guilty to an amended indictment charging her with wire, bank, and securities fraud, as well as conspiracy
Amar, 49, wore a charcoal suit, a white mask and a white shirt as he sat beside his two attorneys.
Throughout the hearing, he crossed his arms and legs, shaking his head.
Standing out in the mahogany courtroom peopled with black-clad lawyers was Javice, who donned brightly colored peach slacks and a pink sweater around her shoulders.
Fergenson detailed the allegations against Javice and Amar.
In 2016, when she was 24-years-old, Javice, who attended the University of Pennsylvania’s Wharton School of Business in Pennsylvania, founded Frank. The start-up was aimed at helping college students navigate applying for federal loans.
Javice told JP Morgan Chase that the company had four million users, prompting the bank to buy Frank in September 2021 for $175 million, prosecutors allege.
Fergenson said Javice and Amar had grossly over-reported their number of users.
“In reality the number was far less, around 300,000,” he said.
During a meteoric ascent, when she was presumed a successful and innovative entrepreneur, Javice was named on prestigious lists including Crain’s New York’s 40 Under 40 and Forbes’ 30 under 30. In 2011, Fast Company proclaimed her one of the most creative people in business. In 2018, she was the subject of a glowing profile by Insider.
After hat after the initial deception to JP Morgan Chase, Javice and Amar pivoted to another, Fergenson said.
“The defendants immediately sought to start the cover-up as well,” he said.
Javice and Amar paid around $100,000 for a list of millions of names of college students. Allegedly, Javice hired a professor to fabricate corresponding email addresses to go with the names.
Javice and Amar presented it all in a spreadsheet to JP Morgan Chase, representing all of the names to be Frank users, Fergenson said.
“Hmm,” Judge Alvin K. Hellerstein interrupted.
The judge nodded as Fergenson explained that JP Morgan Chase — which shut down Frank in January — found nothing amiss during its pre-purchase due diligence investigation. The spreadsheet looked legitimate.
“It was all fake,” Fergenson said. “All fake.”
Javice’s attorney, Alex Spiro, who has alleged that JP Morgan Chase is retaliating against his client for her exposure of their violating of privacy laws, objected.
“The government is just regurgitating to the court JP Morgan Chase’s civil lawsuit,” he said.
“The government has an obligation to prove its case,” Hellerstein overruled.
The defendants are scheduled to return to court on August 15, when a trial date could be set.
In addition to her charges in the Southern District of New York, Javice faces similar charges from the Securities and Exchange Commission.
After Judge Hellerstein adjourned the hearing Thursday, Javice and Amar walked toward each other.
He nodded at her. She shook her head and shrugged.
Read the full article here