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The founder of Frank, a student loan assistance startup company that J.P. Morgan Chase acquired for $175 million two years ago, has been arrested on charges that she duped the financial giant by dramatically inflating the number of customers her company had, authorities said.
Charlie Javice, 31, of Miami Beach, Florida, was arrested in New Jersey on conspiracy, wire and bank fraud charges.
A charging document in Manhattan federal court said she claimed her company had over four million users when it had fewer than 300,000 customers.
Authorities said Javice, who appeared on the Forbes 2019 “30 Under 30” list, would have earned $45 million from the fraud.
In a release, U.S. Attorney Damian Williams said Javice “engaged in a brazen scheme” to defraud the acquiring financial company by fabricating data to support lies she told in a bid to make tens of millions of dollars from the sale of her company.
According to a criminal complaint, Javice in 2017 founded TAPD Inc., which operated under the name Frank, to provide an online platform to simplify the process of filling out the Free Application for Federal Student Aid, a free federal government form used by students to apply for financial aid for college or graduate school.
In 2021, Javice sought to sell her company in her role as its chief executive to a large financial institution, the complaint said.
When JPMC sought to verify that her company had 4.25 million customers, Javice asked her company’s director of engineering to create an artificially generated data set, but the individual declined, it said.
She then hired an outside data scientist to create the synthetic data set as she purchased for $105,000 on the open market real information for over 4.25 million students, the complaint said. But it added that the data she purchased did not contain all of the information she had told JPMC was maintained by Frank.
In a civil complaint filed by the Securities and Exchange Commission, the regulatory agency alleged that Javice made numerous misrepresentations about Frank’s alleged millions of users to entice JPMC to purchase the now-shuttered Frank.
This article was provided by The Associated Press.