A Manhattan federal jury will decide the fate of Frank founder Charlie Javice, who could face up to 30 years in prison for fraud and conspiracy.
JPMorgan Chase accused Charlie Javice, 32, and her top executive at Frank, Oliver Amar, 50, of falsifying data to deceive the bank into acquiring their website for $175 million.
JPMorgan says Javice claimed they had over 4 million users who had already given their sign-in details
According to JPMorgan Chase bank, Javice assured them that 4,265,085 people had used the Frank website or at least filed for the Free Application for Federal Student Aid (FAFSA) during their July 8, 2021 meeting.
Supposedly, Javice stated that these 4 million users all provided their names, emails, and phone numbers; some even gave more details like their social security numbers, addresses, and income details.
However, whenever JPMorgan asked to verify these figures and available data, she refused to give the platform access, citing privacy and terms of service restrictions. She only reassured them that once they made the purchase, all data would be available to them.
In the next two meetings, on July 12 and 13, 2021, Javice still asserted that all four million users had provided their names, emails, and contact details. Despite all these reassurances, the New York-based bank insisted on confirming the website’s user count, resulting in a compromise agreement between the two companies.
They agreed that Javice would send a spreadsheet containing data on all 4.25 million users to a third-party marketing company for review and confirmation.
According to prosecutors, however, Javice and Amar hired an outside company to create a spreadsheet with 4 265,085 rows replicating the statistical properties of its actual users. Allegedly, the Frank website has only 293000 users, most of whom have never even filed an FAFSA and Javice only fabricated data to give the impression of a large user base.
However, before realizing the data had been falsified, Chase bought Frank for $175 million on the marketing company’s confirmation.
After finalizing the deal, Javice and Amar had to release data on its users. Nevertheless, prosecutors alleged that the data they later provided was bought on the open market for $100000.
When Chase’s team even attempted to test the data, they found that most of the email addresses were inactive or invalid. A former employee even confirmed that over 30% of the emails were invalid, adding that only 1% of people who received a Chase email clicked to open it.
In an early 2021 team meeting on Slack, some of the company’s workers questioned whether they had over $4.25 million users. One even joked, “These look like Charlie numbers, and replying to him, another commented, “Charlie is the king of finding magic numbers, haha.”
Javice’s legal team claimed that JPMorgan Chase was more interested in her bringing her on board than their website’s data
JPMorgan Chase bank only secured about 10 new students after spending $175 million to purchase Frank, filing its case against Javice and Amar in December 2022. The month before, the financial services platform had cut off Javice and Amar and even took down the Frank website later on in January 2023.
The US Attorney’s office formally announced Javice’s indictment in April 2023, and the same day, the Securities and Exchange Commission also filed a civil lawsuit charging her with bank and securities fraud.
So far, Javice’s legal team has used many different arguments to plead their case. They even claimed the bank cared more about getting Javice on their side than the students’ data.
They claimed the bank took Javice on as its managing director for student solutions because it recognised her potential, even adding that Javice made Forbes’ Top 30 Under 30 list at age 28. Her defence attorney, Jose Baez, even argued that the platform had negotiated for Javice and that “that’s what they got.”
Her legal team added that Javice clearly had no intentions to deceive the bank, given that even before starting sale negotiations, she had stated how helpful the website was to 300,000 students and families.
They even claimed that Chase misunderstood Javice’s statements around the 4-million-user figure. Her lawyer, Kristen Nelson, stated that Javice was referring to the website’s traffic on Google Analytics metrics, with the 4.25 million figure. Apollo’s Global Management CEO Marc Rowan even testified for her, saying the words user, customer and visitor are used interchangeably, causing the misunderstanding.
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This articles is written by : Nermeen Nabil Khear Abdelmalak
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