NEW YORK – A startup founder who lives in Miami Beach could face decades behind bars for orchestrating a $175 million fraud when selling her company, federal prosecutors said Tuesday.
According to a U.S. Department of Justice news release, in 2017, Charlie Javice, 31, founded a company called Frank, which “offered an online platform designed to simplify the process of filling out the Free Application for Federal Student Aid.”
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In 2021, she sold the company to J.P. Morgan Chase for $175 million, based on data showing the company had 4.25 million customers or “users,” federal prosecutors say.
The problem was, according to prosecutors, Frank had nowhere near 4.25 million users — the real number was less than 300,000.
Prosecutors allege that she falsified the data in order to increase the valuation of her company, standing to gain $45 million from the fraud.
They said that after providing J.P. Morgan Chase with the fake data, Javice and an unnamed co-conspirator purchased real data of 4.5 million students for $105,000 in order to cover up the fake data, representing them as Frank users.
According to a 2021 article in Refresh Miami, Javice moved to the Miami area from New York in 2020 during the height of the COVID-19 pandemic and told the publication that about a third of her company’s employees were based in South Florida.
She was named to Forbes’ “30 Under 30″ list in finance back in 2019.
Prosecutors charged Javice with one count of conspiracy to commit bank and wire fraud, one count of wire fraud affecting a financial institution and one count of bank fraud, each carrying sentences of up to 30 years, along with a charge of securities fraud, which could land her in prison for up to 20 years.
She was arrested in New Jersey Monday night and was set to face a New York federal judge Tuesday.