Former executives at Frank college aid startup plead not guilty to JPMorgan fraud

3:40 pm Thursday, July 13th, 2023

By Luc Cohen

NEW YORK (Reuters) -The founder and a former executive of college financial aid startup Frank pleaded not guilty on Thursday to U.S. criminal charges of defrauding JPMorgan Chase into buying the company for $175 million.

Charlie Javice, 31, who founded Frank, entered her not guilty plea to an amended indictment accusing her of wire fraud, bank fraud, securities fraud and conspiracy charges.

Olivier Amar, 49, who was Frank’s chief growth officer, pleaded not guilty to the same charges.

Both entered their pleas before U.S. District Judge Alvin Hellerstein in Manhattan.

Javice and Amar also face related civil charges by the U.S. Securities and Exchange Commission. JPMorgan is suing both defendants in the federal court in Delaware.

Prosecutors have said Javice repeatedly lied about Frank to the largest U.S. bank, including by claiming that she had lined up 4.25 million student customers when in fact she had data for only about 300,000. 

Amar, meanwhile, bought “sham lists” of college students’ data from third-party providers that Frank falsely passed off to JPMorgan as customers, the SEC said on Wednesday.

JPMorgan has said it learned of the fraud after sending marketing materials to people whom Javice claimed were real, and finding that just 28% were delivered and 1.1% were opened, far fewer than in similar campaigns.

The bank shut down Frank in January, and Chief Executive Jamie Dimon branded the acquisition a “huge mistake.”

Javice had studied at the University of Pennsylvania’s Wharton School.

Before selling Frank, she had received much media praise for her work, showing up in 2019 in Forbes magazine’s “30 Under 30” finance list and Crain’s New York Business’ “40 Under 40” list.

In the Delaware case, Javice filed counterclaims against JPMorgan in February, accusing the bank of harming her reputation and withholding about $28 million of payments.

(Reporting by Luc Cohen in New York; Editing by Howard Goller)