The $175 Million Lie That Shook Wall Street
Charlie Javice, once hailed as a fintech disruptor for her student aid startup Frank, has been sentenced to 85 months in federal prison after a jury found her guilty of orchestrating a massive fraud during JPMorgan Chase’s acquisition of her company.
What Went Down?
Javice’s startup, Frank, promised to simplify the Free Application for Federal Student Aid (FAFSA) process for college students. But behind the scenes, she inflated Frank’s customer base to lure JPMorgan into a $175 million deal. When the bank’s due diligence team requested proof of user numbers, Javice didn’t just exaggerate—she fabricated millions of fake users using “synthetic data.”
The Scheme Unraveled
- Partner in crime: Adam Kapelner, a math professor at Queens College, helped generate fake data—but claimed he didn’t know it would be used to defraud JPMorgan.
- Data brokers: Javice and Olivier Amar, Frank’s Chief Growth Officer, purchased real names and emails to pass JPMorgan’s validation tests.
- Discovery: Post-acquisition audits revealed the customer list was largely fictitious—prompting JPMorgan to file a civil lawsuit.
Sentencing Snapshot
| Charge | Verdict | Sentence Requested | Sentence Given |
|---|---|---|---|
| Fraud (3 counts) | Guilty | 144 months | 85 months |
| Conspiracy to commit fraud | Guilty |
Public Reaction & Legal Defense
Javice’s legal team, now including high-profile attorney Alexandra Shapiro (known for representing Sean “Diddy” Combs), submitted 114 character reference letters pleading for leniency—including from rabbis, doormen, and even a judge who had once been incarcerated.
During sentencing, Javice tearfully apologized: “I have remorse deeper than I knew possible,” she told Judge Alvin K. Hellerstein. She cited ongoing fertility treatments as a reason for a lighter sentence, arguing prison could jeopardize her chance to have children.
Infographic: Timeline of the Frank Scandal
Credit: The New York Times
- 2021: JPMorgan acquires Frank for $175 million.
- 2023: Internal JPMorgan audit uncovers discrepancies in Frank’s user data.
- March 2025: Federal jury convicts Javice on all counts.
- September 29, 2025: Javice sentenced to 85 months in prison.
Why This Matters
This case is a cautionary tale about due diligence in big tech acquisitions—and a rare instance where a founder’s deception led to serious prison time. As Assistant U.S. Attorney Micah F. Fergenson put it: “They acquired a crime scene.”
For more on corporate fraud and startup ethics, see our coverage on [INTERNAL_LINK:fintech scandals].
