NEW YORK (AP) — A Florida woman backed by wealthy advisers who created a company to make it easier for college students to apply for financial aid went on trial Thursday on criminal charges that she defrauded JPMorgan Chase & Co. in a $175 million buyout deal.
Frank founder Charlie Javice committed a “massive fraud” by telling lies to claim her company had millions of customers when it only had about 400,000 clients as she closed in on a deal in the summer of 2021, Assistant U.S. Attorney Rushmi Bhaskaran told jurors in an opening statement at the trial of Javice and another former Frank executive.
Javice's attorney, Jose Baez, blamed the criminal probe that resulted in charges against his client on the nation's largest bank, saying it experienced “buyer's remorse” after the federal government altered regulations so that the purchase no longer was sensible. The only way to cancel the buyout was to claim fraud, he said.
Javice, 31, a Miami Beach, Florida, resident, was arrested in April 2023 on conspiracy, wire and bank fraud charges.
Prosecutors have said that Javice, who appeared on the Forbes 2019 “30 Under 30” list, would have earned $45 million from the fraud.
Bhaskaran said the nation's largest bank requested proof shortly before the purchase closed that there really were over four million customers.
“They were this close to a deal that would make them millionaires. There was only one thing that stood in their way: the truth,” she said.
Javice reached out to a friend from her college days to buy “off-the-shelf data on four million people” and the deal closed, the prosecutor said.
“Eventually, this house of cards, built on the defendants’ lies, came crashing down,” Bhaskaran said.
Baez, though, said his client acted honestly and honorably in negotiations with JPMorgan and was hired as part of the buyout deal to a three-year contract that included millions of dollars in bonuses with plans for her to become JPMorgan's “face of students” to connect the bank with a coveted market of young new banking customers.
He said the deal with JPMorgan was finalized over 22 business days as the bank hurried to capture the startup company with links to the lucrative market of young clients before other banks could beat them to it.
“They took a gamble and lost, and now they want to destroy a life for it,” Baez said.
As Baez repeatedly attacked the bank in his opening statement, prosecutors successfully objected several times. Judge Alvin K. Hellerstein reminded jurors that the case was not about the bank but rather was about whether Javice told lies to secure a buyout.
A JPMorgan spokesperson declined comment.
