The founder of the Frank student aid startup, Charlie Javice, has pleaded not guilty to a $175 million fraud accusation during a hearing in court on Thursday morning.
The allegations come as the millennial tech founder defrauded JP Morgan Chase out of hundreds of millions of dollars. The chief growth officer at Frank, Olivier Amar, also pleaded not guilty to assisting Javice in fabricating millions of customers for their startup company. Frank purported to help college students secure financial aid for their educational expenses.
Frank Founder Pleads Not Guilty to Fraud Accusations
In a statement in court on Thursday, Assistant US Attorney Micah F. Fergenson said that Amar was effectively the company's number two. The 49-year-old was seen wearing a charcoal suit, a white mask, and a white shirt beside his two attorneys.
Amar crossed his arms and legs through the court hearing while shaking his head as the proceedings passed. On the other hand, 31-year-old Javice stood out with her black-clad lawyers, as per Business Insider.
Javice was only 24 years old in 2016 when she founded her startup company after attending the University of Pennsylvania's Wharton School of Business. Frank was said to have been aimed at assisting college students to navigate their applications for loans from the federal government.
The entrepreneur told JP Morgan Chase that her company had four million users, which prompted the bank to buy Frank in September 2021 for $175 million. However, Fergenson claimed Javice and Amar grossly over-reported their company's users. He said that, in reality, Frank's users were only around 300,000 in total.
Javice was also previously named on prestigious lists during a meteoric ascent where she was considered a successful and innovative entrepreneur. These lists include Crain's New York's 40 Under 40 and Forbes' 30 Under 30.
Fast Company also said in 2011 that Javine was one of the most creative people in business, and in 2018, she was the focus of a glowing profile by Insider. However, according to Business Insider, Fergenson said that after their initial deception, the defendants pivoted to another.
Fraudulent Startup Company
Amar and Javice are accused of paying roughly $100,000 for a list of millions of names of college students. They are also thought to have hired a professor to fabricate corresponding email addresses with the names they bought.
Fergenson claimed that the defendants presented it all in a spreadsheet to JP Morgan Chase, representing all of the names, to be Frank users. Judge Alvin K. Hellerstein nodded as the attorney continued to say that JP Morgan Chase did not find anything dubious during its pre-purchase due to diligent investigation.
The bank said it only learned about the fraud after sending marketing materials to people Javice claimed were real. JP Morgan Chase found that only 28% were delivered and 1.1% were opened, far fewer than in similar campaigns.
In January, the bank shut down Frank, and Chief Executive Jamie Dimon said that the acquisition of the startup company was a "huge mistake." but Javine filed counterclaims against the bank in February, accusing it of damaging her reputation and withholding roughly $28 million in payments, said Reuters.
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