An entrepreneur accused of exaggerating the value of her college financial planning startup ahead of its sale to JPMorgan Chase pleaded guilty Monday in Manhattan to federal fraud charges, a spokeswoman for the US attorney’s office told ABC News. pleaded not guilty.
Charlie Javis, 31, who once made the prestigious Forbes “30 Under 30” list of “Big Money” entrepreneurs, sold the now-defunct tech startup to a bank in 2021 for $175 million — millions of dollars more than the company, Federal prosecutors said Javis was arrested last month.
He was indicted on May 18 on charges of securities fraud, wire fraud, bank fraud and conspiracy.
US Attorney Damian Williams said after Javis’ arrest last month that it “should be a wake-up call to entrepreneurs who lie to further their businesses.” [and] That their lies will be known to them.
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Photo: Charlie Javis in Manhattan federal court in New York, April 4, 2023, after signing a $2 million bond to stay free of charges, Frank, his startup company, with $175- falsified records for JP Morgan leaving Chase to cheat. million. (Lawrence Neumeister/AP, File)
His spokesman denied the allegations. His attorney, Alex Spiro, could not be reached for comment.
JPMorgan Chase began talks with Zweiss in 2021 about acquiring its startup called Frank, which promised to simplify the financial aid process for college applicants.
Representatives of the financial institution were baffled by its model: Frank’s software would allow students to apply for federal financial aid in as little as seven minutes, according to company documents cited in the complaint. With Javis’s technology, the complex FAFSA (Free Application for Federal Student Aid) process will be streamlined. Once the form is completed, it will take only one click, the company claimed.
Before the deal, Joyce told the bank that about four million people already had accounts with Frank. But the startup had very few users, argued prosecutors, who said Frank had fewer than 300,000 accounts at the time.
Before JPMorgan Chase agreed to buy the franc, the bank requested the data to verify the number of its users. Prosecutors said it was then that Javis turned to his engineering director and asked him to create the data set.
When he refused, prosecutors said, he enlisted outside help from a data scientist to create a spreadsheet with nearly four million rows — one to represent each account. The lines included the names and emails of people the company claimed had signed up.
JPMorgan Chase went ahead with the acquisition, paying Zweiss $21 million for its equity stake in Frank – for a total of $175 million. Following the transaction, Javice was hired to work at JPMorgan Chase for $20 million.
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During his tenure at the company, prosecutors say Javice successfully procured another data set of information, but this time containing the names of actual students. But when JPMorgan Chase sought to launch a marketing campaign for people it believed had signed up for Frank, it found some data points missing, prosecutors said. .
In November 2022, following an internal investigation, Javis was fired by the company. In April, he was arrested.
Javis’ plea comes just a week before fellow startup founder Elizabeth Holmes, 39, will report to prison to serve more than 11 years. Holmes was convicted in 2022 of defrauding investors about his blood-testing technology, which he said could test anything with a single drop of blood.
Joyce, who is out on $2 million bail, is due for his next court appearance on June 6.
Startup founder Charlie Javis pleads not guilty to fraud on JPMorgan sale, originally appeared on abcnews.go.com