Charlie Javice, the founder of the popular college financial aid startup Frank, has been convicted. She defrauded JPMorgan Chase on a $175 million acquisition financing engagement. A federal court in Manhattan, New York City handed down the conviction on a Friday. This came on the heels of piracy that Javice had grossly exaggerated her startup’s customer base. This high-level misrepresentation would prove to be a key factor in JPMorgan Chase’s decision to acquire Frank in 2021.
Javice had been accused of falsely pumping up the size of Frank’s customer base. This over-indexing was a key reason why the global financial giant Fortune 500 firm decided to invest in the nascent startup. The charges had claimed that she deliberately defrauded JPMorgan Chase. She committed a number by producing a bloated customer list at the time of the acquisition deal. Javice enters federal court on June 6th, 2023, the courtroom in which she was tried and convicted.
The trial court’s case hinged on Javice’s fraudulent misrepresentation of a plethora of information. This fraud had a major impact on the banking giant’s decision to purchase Frank. The prosecution claimed that the inflated customer counts were key to persuading JPMorgan Chase about the worth of the fledgling startup. The misrepresentation played out to such success that the agreement was ultimately concluded at a final cost of $175 million.
So far, JPMorgan Chase has not said anything about the trial’s decision. A spokesperson for the bank has not commented on the implications of the verdict or what that verdict might indicate. This case illustrates how important it is to perform careful due diligence in corporate acquisitions. Proper and honest model representation is incredibly important, particularly in the high-velocity world of the startup ecosystem.