Charlie Javice, the 31-year-old founder of now-shuttered student loan software company Frank, has been charged with fraud by the Securities and Exchange Commission.
The SEC filed a complaint Tuesday alleging that Javice lied about having data on 4 million clients, including making up fake client information, in order to entice JP Morgan Chase to buy her company. Javice started Frank, a student-aid assistance tool, shortly after graduating from the University of Pennsylvania, and sold it to JPMorgan Chase in 2021 for $175 million. As part of the deal, Javice got a $9.7 million payout and a job as a managing partner at JPMorgan Chase, which came with a $20 million retention bonus.
Javice, along with an unnamed Frank executive,"engaged in a months-long scheme to fabricate the data that both of them knew JPMC was paying $175 million to acquire," the complaint says.The bank discovered the alleged fraud when a test marketing campaign to Frank's supposed customers flopped. Because JPMorgan Chase had acquired Frank's internal records as part of the acquisition, it soon found emails in which Javice asked the professor to create"synthetic data" for 4.
"Rather than help students, we allege that Ms. Javice engaged in an old school fraud," Gurbir Grewal, director of the SEC's enforcement division, said in a statement."Even non-public, early-stage companies must be truthful in their representations, and when they fall short we will hold them accountable as in this case.", alleging fraud; she countersued. She no longer works at the bank.
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