Frank founder Charlie Javice pleaded not guilty to charges that she defrauded JPMorgan Chase & Co. in its $175 million acquisition of her college financial-planning site.
Javice was arraigned on May 22 via video conference in Manhattan federal court on charges including conspiracy, wire fraud affecting a financial institution and bank fraud. Appearing calm and composed, she spoke only to confirm her not-guilty plea.
Javice had not previously entered a plea despite being arrested on a criminal complaint in early April and being released on a $2 million bond. According to a May 4 court filing, she’s been in talks with prosecutors to resolve the charges.
The next hearing in the case was set for June 6.
Prosecutors said Javice engaged in “a brazen scheme to defraud” JPMorgan by vastly inflating the number of Frank users, falsifying documents to show it had more than four million customers when it actually had less than a tenth of that number. She allegedly engaged an outside data scientist to create fake user data when Frank’s own engineering director refused to do it.
Javice was set to make $45 million from the deal, prosecutors said.
JPMorgan sued Javice for fraud in Delaware federal court in December. The bank has since shut down the Frank site.
Javice has argued that JPMorgan rushed to buy Frank without doing proper due diligence and was also trying to deflect attention from violations of student privacy laws. Her lawyers have called the suit “nothing but a cover” and said JPMorgan was just trying to “retrade the deal.”
The case is US v. Javice, 23-cr-251, US District Court, Southern District of New York (Manhattan).
(Corrects reference to Javice filing in final paragraph.)
