NEW YORK — A prosecutor told a New York jury on Wednesday that the young CEO of a startup that said it had helped millions of college students apply for financial aid used a “brazen fraud” to sell the business to JPMorgan Chase & Co. for $175 million.
Forbes named Charlie Javice to their “30 Under 30” list in 2019. She is now being accused of greatly inflating the number of customers her company, Frank, had. She is being charged with conspiracy and fraud along with another former top official.
The lawyer for Javice, 32 years old, called the case against her “incredibly flawed” and asked the jurors to find her not guilty. He said there wasn’t enough proof.
Sometimes Javice smiled and turned her chair to face the judges as he spoke.
The Free Application for Federal Student help (FAFSA) is a complicated government form that students use to apply for financial help for college or graduate school. Frank was made to make it easier to fill out.
When Javice was in her mid-20s, she started the company. She was praised by many news outlets for creating a system that would help students who need financial aid get through the maze of rules and requirements to get tuition aid.
The company used to be one of the first to target college students. Banks try to get these students to start checking or credit card accounts so they’ll be customers for life.
When JPMorgan Chase tried to buy the company in 2021, one of the things it wanted was to see Frank’s list of clients.
Javice said at the time that Frank had more than 4.25 million clients. The jury was told by Assistant U.S. Attorney Nicholas Chiuchiolo that it really had about 400,000.
Chiuchiolo used emails, text messages, and other proof to show that Javice lied to JPMorgan many times in the summer of 2021 in order to get a buyout that would earn her $45 million.
The prosecutor said that when JPMorgan Chase wanted to check the list of clients, Javice first asked the head of tech at her company if he could make “synthetic data” to show that the company had more than 4 million customers.
Chiuchiolo said the worker said he “would not do anything illegal” and refused.
Prosecutors say Javice paid an outside data scientist $105,000 to make a set of data that showed more than 4.2 million students.
During the five-week hearing, Javice did not give a statement. The person from Miami Beach, Florida, was caught in April 2023 and is now out on bail. The jury was supposed to start talking about the case on Thursday.
