Young Tech Star's Big Lie: The $175 Million Fraud

A young entrepreneur, Charlie Javice, was found guilty of tricking JPMorgan Chase. She claimed her startup, Frank, had millions of customers. In reality, she had only a fraction of that number. This deception cost the bank $175 million. The trial lasted five weeks in a Manhattan court. Javice, now 32, could spend decades in prison. Her co-defendant, Olivier Amar, faces the same fate. The case has drawn comparisons to the Theranos scandal. Javice started Frank in her mid-20s. The company promised to make applying for financial aid easier. Students paid a few hundred dollars for this service. Javice became a media darling, appearing on TV and even making Forbes' "30 Under 30" list. JPMorgan bought Frank in 2021, believing in its supposed success. However, the bank later found out that Javice had lied about her customer base. She claimed to have over four million clients, but there were only about 300, 000. The list she provided to support her claim was mostly fake. During the trial, Javice's lawyer argued that JPMorgan knew about the discrepancies. He suggested the bank made up the fraud allegations due to regret over the purchase. The defense also asked the judge to dismiss the verdict, stating the evidence was insufficient. The judge will hear arguments on this next week. There is also a dispute over whether Javice and Amar must wear ankle monitors while awaiting sentencing. Javice's lawyers argue that the device will interfere with her new job teaching Pilates.Javice and Amar were convicted on all four counts. These include conspiracy, bank fraud, and wire fraud. Each charge carries a maximum sentence of 30 years in prison. The prosecutor stated that Javice and Amar thought they could lie their way to a big payday. However, their lies caught up with them. This case is part of a trend where young tech executives gain fame with supposedly innovative companies. These companies often collapse amid questions about fraud and deception. Frank was founded soon after Javice graduated from the University of Pennsylvania. She was motivated by her own struggles with the financial aid process. The company's backers included venture capitalist Michael Eisenberg. Frank's software was supposed to help students get more financial aid. JPMorgan was interested in Frank's supposedly large customer base. The bank hoped these future college graduates would become lifelong customers. However, after the purchase, JPMorgan found evidence of Javice's lies. Frank's chief software engineer, Patrick Vovor, testified against Javice. He said she asked him to create fake data to support her claims. When he questioned the legality, Javice and Amar assured him it was fine. They did not want to end up in prison. Vovor refused to help, stating he would not do anything illegal. The defense tried to discredit Vovor, suggesting he was resentful. He denied this. Prosecutors also revealed that Javice paid a college friend to create fake names. This information was sent to JPMorgan's data provider, who did not verify its authenticity.