In New York on February 20, the trial commencing against Charlie Javice for allegedly defrauding JPMorgan Chase through the sale of her college financial aid startup, Frank, began with her defense asserting no wrongdoing and attributing JPMorgan's concerns to "buyer's remorse."
Javice, 32, has pleaded not guilty to securities fraud, wire fraud, bank fraud, and conspiracy pertaining to JPMorgan's acquisition of Frank for $175 million in July 2021.
Prosecutors alleged that Javice misled JPMorgan by falsely claiming Frank had 4.25 million customers when it had approximately 300,000.
Javice's attorney, Jose Baez, argued that JPMorgan conducted thorough due diligence on Frank before the acquisition and was aware of its customer base, suggesting the bank used the changing financial aid regulations as a pretext to exit the deal.
Rushmi Bhaskaran, the prosecutor, claimed that Javice resorted to obtaining fake information from a college acquaintance to fulfill JPMorgan's data requirements, while her co-defendant Olivier Amar, Frank's chief growth officer, purchased fabricated student data to present as legitimate customers.
Bhaskaran accused Javice and Amar of fabricating information to amass wealth, stating, "It was through their lies that they became multimillionaires."
Jonathan Cogan, representing Amar, maintained that his client was not privy to the negotiations with JPMorgan.
Javice, a Florida resident and graduate of the University of Pennsylvania's Wharton School, was included in Forbes magazine's "30 Under 30" list in 2019.
The trial in front of U.S. District Judge Alvin Hellerstein involves jurors and alternates selected earlier on the same day.
JPMorgan's CEO Jamie Dimon labeled the Frank acquisition a "huge mistake," though the bank declined to comment on the ongoing trial.
Established in 2017, Frank was marketed as a tool to streamline the college financial aid process for students and parents.
Amar's lawyer indicated that discussions had taken place with Capital One before turning to JPMorgan for a potential deal.