The U.S. Securities and Exchange Commission has charged Charlie Javice, the founder of student financial aid startup Frank, with fraud in connection to the $175 million sale of the company to JPMorgan Chase Bank in 2021. The charge is rooted in JPMorgan’s lawsuit filed against Javice in December, which claimed she faked millions of customers and misled the bank in order to entice them to buy her company.
JPMorgan alleged that Javice had manipulated data to make it appear as if Frank had 4.25 million customers, including paying an external source $18,000 to create the data “required to close the deal”. Javice has denied the claims and filed her own suit against JPMorgan Chase, alleging the bank terminated her employment in November “in bad faith”. JPMorgan revealed it discovered the fraud when marketing test emails sent out to a list of Frank’s customers, provided by the company, had more than 70% bounce back.
Throughout the course of the acquisition, Javice reportedly received $9.7 million directly in stock proceeds, with her trust accounts set up to receive even more money and a $20 million contract entitling her to a retention bonus as a new employee at JPMorgan. The SEC has now charged Javice with violating the antifraud provisions of the Securities Act of 1933 and the Securities Exchange Act of 1934. The agency is seeking injunctive relief, an officer and director bar, disgorgement of all proceeds gained through this fraud and civil penalties.
Frank is a financial aid startup created to help students navigate the college financial aid process. The company claims to have helped over 350,000 people access financial aid and has gone on to receive investments from some major names in the industry. Charlie Javice is the founder of the startup, with a varied career spanning from digital marketing to venture capital. She was just 17 when she started Frank, a fact that made her a celebrated business leader due to her ambitious achievements at such a young age. Her success eventually led to her being named one of Forbes’ 30 Under 30 in 2020.
