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Frank Founder Charlie Javice to Face Trial in 2024 for Alleged Fraud Involving JPMorgan

Prosecutors allege that Charlie Javice exaggerated Frank's customer numbers to influence the bank into acquiring her startup.
UPDATED NOV 14, 2023
Image Source:  Charlie Javice (2nd from L) is seen arriving at court / MEGA/GC Images
Image Source: Charlie Javice (2nd from L) is seen arriving at court / MEGA/GC Images

Charlie Javice, accused of tricking JPMorgan into acquiring her now-closed college financial aid venture, Frank, is set to face trial in October 2024, as ordered by U.S. District Judge Alvin Hellerstein in New York. The judge emphasized the need for prosecutors to push JPMorgan Chase for additional evidence that could support Javice's defense. JPMorgan shut down the college financial aid platform it bought for $175 million in January after it found that 70% of marketing emails sent to a batch of 400,000 customers bounced back, as per CNBC.

Image Source: Charlie Javice, founder of Frank, arrives at federal court in New York, US, on Thursday, July 13, 2023. Three cases against Javice, by JPMorgan, Manhattan federal prosecutors and the Securities and Exchange Commission, all allege that she falsified data to vastly inflate the number of Frank users during deal negotiations with the bank. Photographer: Yuki Iwamura/Bloomberg via Getty Images
Charlie Javice, founder of Frank, arrives at federal court in New York, US/ Yuki Iwamura/Bloomberg via Getty Images

Facing charges of securities fraud, wire fraud, bank fraud, and conspiracy since May, Javice has entered a not-guilty plea and is currently on a $2 million bond. Prosecutors allege that she significantly inflated Frank's customer numbers to persuade JPMorgan to purchase the company, claiming over 4 million customers when the actual count was only a fraction of that, in the hundreds of thousands.

Court documents reveal that Javice allegedly concocted this inflated figure by presenting JPMorgan with a list of fictitious names and emails. Frank, established in 2017 by Javice, was acquired by JPMorgan in 2021, and as part of the deal, the bank hired Javice and other Frank employees. Javice reportedly received over $21 million for selling her stake in the startup, along with a $20 million retention bonus.

In a filing last October, Javice asserted that JPMorgan had not produced numerous documents, including an internal assessment of the Frank acquisition, an internal investigation of Frank, and internal communications among JPMorgan staff. She claimed that the government's response seemed intentionally inactive, suggesting that JPMorgan held essential and potentially exculpatory materials that the government was choosing not to collect.

According to Javice, the government appeared satisfied with building its entire case based on JPMorgan's selectively provided set of documents. This adds a layer of complexity to the legal proceedings, raising questions about the completeness and accuracy of the evidence presented by both sides in the impending trial.

Image Source: Charlie Javice, founder of Frank, right, leaves federal court in New York, US, on Thursday, July 13, 2023. Three cases against Javice, by JPMorgan, Manhattan federal prosecutors and the Securities and Exchange Commission, all allege that she falsified data to vastly inflate the number of Frank users during deal negotiations with the bank. Photographer: Yuki Iwamura/Bloomberg via Getty Images
Charlie Javice, founder of Frank, right, leaves federal court in New York, US/ Yuki Iwamura/Bloomberg via Getty Images

Despite federal prosecutors claiming they've already handed over all pertinent documents to both the government and the defense, recent court documents have revealed ongoing disputes in the case against Charlie Javice. In response to JPMorgan's compliance with subpoenas, prosecutors argued that the bank, like other subpoena recipients, has been cooperative.

However, in a recent ruling, Judge Hellerstein has mandated that federal prosecutors push JPMorgan Chase to further search for and produce emails and documents linked to any JPMorgan officers or employees mentioned in the complaint. This directive is to be executed under the existing subpoenas, and the judge has set a deadline for the production of these documents by the end of next week.

The complexity of the case is underscored by JPMorgan CEO Jamie Dimon's acknowledgment of the acquisition of Frank as a "huge mistake" during a January conference call, as reported by Reuters. This admission aligns with the subsequent closure of Frank by the bank in January.

Image Source: Charlie Javice, founder of Frank, center, arrives at federal court in New York, US, on Tuesday, June 6, 2023. Three cases against Javice, by JPMorgan, Manhattan federal prosecutors and the Securities and Exchange Commission, all allege that she falsified data to vastly inflate the number of Frank users during deal negotiations with the bank. Photographer: Bing Guan/Bloomberg via Getty Images
Charlie Javice, founder of Frank, center, arrives at federal court in New York, US/ Bing Guan/Bloomberg via Getty Images

The ongoing legal tussle will continue with prosecutors and the defense reconvening for their next status conference scheduled for January. The court's insistence on additional document production suggests that the intricacies of the case are far from being resolved, setting the stage for further developments in the upcoming court proceedings.

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