She spent $120,000 to fraudulently defraud American financial giants of $200 million
Perhaps, Jarvis will regret his defrauding JPMorgan Chase for the rest of his life. Just a year and a half ago,She is also considered one of the most successful young entrepreneurs in the United States, with nearly $50 million in assets before the age of 30.
Charlie Javice, the founder of student loan assistance company Frank, appears in court over allegations she bought or invented email addresses to claim millions of users
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- Charlie Javice, the founder of buzzy finance startup, Frank, appeared in court Tuesday.
- Javice is accused of inflating the number Frank’s users before she sold it to JPMorgan Chase.
- Her lawyer declined to comment after the hearing.
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Back in 2021, a company that promised to help college students navigate the confusing landscape of federal financial aid was so hot that JPMorgan Chase agreed to shell out $175 million to acquire it.
That company, Frank, was not as it seemed. While it claimed to have more than four million users, it had, in reality, fewer than 300,000 customers, prosecutors said during a hearing at Manhattan federal court on Tuesday.
In January, federal prosecutors announced an array of fraud charges against Frank’s founder, Charlie Javice. The charges represented a significant fall for one of the much-lauded young fintech founders.
Jarvis founded Frank in 2016 when she was just 24. A spot on Forbes’ 30 under 30 list and multiple glowing profiles followed. Jarvis was hailed as “the voice of a microfinance generation.”
But within a year of selling Frank to JPMorgan Chase, the bank cried foul, claiming that the number of users had been wildly inflated. The bank sued, and federal charges followed.
An investigation by Insider also found that Javice had a troubling history of exaggerating her accomplishments.
During a brief hearing on Tuesday, Assistant U.S. Attorney Micah F. Fergenson said that Javice had led JPMorgan to “believe that Frank had been an extremely successful start up” when in fact she had “at most, less than 300,000 customers.”
The complaint alleges that Javice bought names and email addresses from third parties and then represented them as Frank customers. She also allegedly hired a professor to make fake email addresses.
Javice, who has pleaded not guilty, appeared at Tuesday’s hearing dressed in sharp shades of ivory and navy.
At the start of her court appearance, a clerk was unable to recognize her and appeared to assume she would be a man.
“Is Charlie Javice here?” the clerk asked, looking in her direction.
As Javice shot up her pink-manicured right hand, with a ring finger banded in silver and diamonds, the clerk acted shocked, and apologized.
“It happens a lot,” Javice said cheerfully, her subtly-highlighted hair swaying.
In contrast, octogenarian Judge Alvin K. Hellerstein, with a bald head and small, round spectacles, was stern as he questioned the prosecution. Starting with the name of Javice’s company.
“F-r-a-n-k?” the judge asked. “What did that company do?”
Fergenson explained that Javice had made JPMorgan Chase, “believe that Frank had been an extremely successful start up.”
The complaint alleges that Javice bought names and email addresses from third parties and represented them to JP Morgan Chase as Frank customers. She also allegedly hired a professor to make fake email addresses.
“Accounts of students were inflated?” Judge Hellerstein asked. “Exactly, your honor,” Fergenson said.
Javice’s attorney, Alex Spiro, made no comment when approached by reporters outside the courtroom.
In addition to being charged with wire, bank, and securities fraud by the Southern District of New York, Javice also had a similar suit filed against her by the Securities and Exchange Commission. Three of the charges she faces carry maximum prison sentences of 30 years.
Judge Hellerstein set a status conference date for July 13.
She spent $120,000 to fraudulently defraud American financial giants of $200 million
The American financial giant JP Morgan Chase, who dominates Wall Street, was easily defrauded of nearly 200 million US dollars by a little girl.
financial giants cheated
With a history of more than 220 years, JPMorgan Chase is the largest banking giant in the United States and the bank with the highest market value in the world, with assets exceeding US$3.6 trillion and a total of more than 240,000 employees. Still, the significance of New York City-based JPMorgan to America simply cannot be quantified.
JPMorgan Chase is not only the cornerstone of the US financial industry and the most Too Big To Fail bank, but also the designated partner of the US government, responsible for helping the government clean up the mess during the financial crisis.After the outbreak of the subprime mortgage crisis in 2008, under the direct arrangement of the federal government, JPMorgan Chase acquired the bankrupt Washington Mutual and Bear Stearns successively, avoiding a complete collapse of the US financial industry.
However,Today’s young people are so courageous that even JPMorgan Chase, which has overshadowed the sky in both political and business circles in the United States, dares to cheat;And the fraudulent tricks are so simple and low-level. Perhaps JPMorgan Chase’s professional M&A team could not help but relax their vigilance when they saw this pure and sunny face, and did not maintain professional and strict review standards.
Charlie Javice, 31, was formally charged by the U.S. Department of Justice after she was arrested last week as she boarded a plane at Newark Airport near New York. She faces several federal charges including wire fraud, financial fraud, conspiracy to commit fraud, and securities fraud. If convicted, each count carries a maximum sentence of 30 years in prison. Although she will not be sentenced to a hundred years in prison, a long prison sentence is inevitable. In addition, Jarvis faces a civil lawsuit for securities fraud by the U.S. Securities and Exchange Commission (SEC).
U.S. Attorney Williams in Manhattan stated that Jarvis was suspected of seriously inflating the number of users by fraudulent means to deceive JPMorgan Chase into buying the company he founded.”She lied directly to JPMorgan and falsified data in order to sell the business to JPMorgan, for which she received more than $45 million.”
A federal judge in Manhattan later set Jarvis on $2 million bond.However, this amount is not a big deal for her. She used her Miami real estate as collateral to post bail and returned to Florida to await court appearance.
As a condition of bail pending trial, Jarvis was forced to surrender two passports of the United States and France (she is a dual citizen), and was only allowed to travel between Miami and New York, and was not allowed to go out at night, and was not allowed to contact witnesses related to the case. Including employees of JPMorgan Chase and her own business.
Perhaps, Jarvis will regret his defrauding JPMorgan Chase for the rest of his life. Just a year and a half ago,She is also considered one of the most successful young entrepreneurs in the United States, with nearly $50 million in assets before the age of 30.
(The seemingly innocent and sweet scammer)
Entrepreneurial Success Fairy Tale
Vanity and greed ruined Jarvis’s blossoming life. This sweet-looking girl was born in New York. She is a rich second generation of Wall Street. She spent her time in elite private schools in New York from kindergarten to high school, and successfully graduated from the Wharton School of Business at the University of Pennsylvania.
Since her father worked in a hedge fund, Jarvis had a good understanding of the operation of the financial industry on Wall Street since she was a child. Her brother also served as the chief data officer of another American chain restaurant giant. She knows how to use data to deal with the financial industry.
In 2016, Jarvis, who was only 24 years old, founded the student loan application tool website Frank, personally serving as the CEO, and officially launched it in 2017 to help students and parents select and apply for college grants and student loans. Jarvis called this website: the Amazon of student loans, which means that one-stop student financial services are like picking goods.
Some personal integrity issues of entrepreneurs will surface in many details, but they are always easily overlooked.Frank faced controversy at the beginning of its establishment and became the focus of the US government.In 2018, the U.S. Department of Education accused Jarvis of using misleading descriptions to make users think that Frank, a bursary platform, was related to the Ministry of Education. In the end, the two parties reached a settlement. Frank revised many website descriptions to clarify that he had no relationship with the Ministry of Education.
In 2019, the 27-year-old Jarvis appeared on the “Forbes” magazine and was included in the “30 Under 30” list (30 young entrepreneurs under the age of 30). He is considered to be the most anticipated young entrepreneur and future in the United States business leaders.
In 2021, JPMorgan Chase, which plans to expand its student loan business, will set Frank as an acquisition target. During the negotiation process, Jarvis has always said that his Frank platform has 4.3 million users. This huge target user base is the main reason to attract JPMorgan Chase’s acquisition.
As is customary, JPMorgan’s M&A team must conduct due diligence, requiring Jarvis to provide proof of the company’s status. Jarvis subsequently provided JP Morgan with a list of user data including specific identities, addresses, and contact information to prove himself. Perhaps it was the dereliction of duty of the JP Morgan M&A team. They did not carefully verify the user data. In the end, they agreed to acquire Frank at a price of 175 million US dollars based on the valuation of 4.5 million users.
With this acquisition, Jarviston, who was only 29 years old, reached the pinnacle of his life and was worth more than 45 million US dollars. She cashed out $21 million of Frank’s equity and received more than $20 million in retention bonuses from JPMorgan Chase. Jarvis also became managing director of student financial products as Frank merged into JPMorgan’s Chase bank.
On the day the deal was announced, Jarvis wrote on LinkedIn,“It’s not every day that an entrepreneur has a fairytale new beginning, but it’s not the end either.”
(her profile flaunts success)
However, behind Jarvis’s successful entrepreneurial personality are lies and deceit. Shortly after the acquisition of Frank was completed, JPMorgan sent marketing emails to users to introduce the transaction and new business products. But the vast majority of emails they send get bounced. Only 1% of emails that are successfully sent are shown as read.
JPMorgan Chase’s management team realized that something was wrong, and a new investigation into Frank’s business situation surprised them. Frank, who claims to have 4.5 million users, actually only has more than 200,000 users, and Jarvis fabricated the data of 4 million users.
Court documents show that after JPMorgan’s M&A team asked Jarvis to provide proof of user data, Jarvis initially instructed Frank’s engineering director to fabricate fake user data, and also tried to reassure the other party, “It’s not a big deal, we will not go to jail for this. Yes.” But the engineering supervisor still refused to cooperate with the fraud.
The Justice Department’s forensics effort obtained all emails and chats between JPMorgan and Jarvis, as well as records of all contacts between Jarvis and Frank executives, as well as outside data experts and consulting firms.
The investigation revealed that Jarvis spent $18,000 to hire an outside data specialist to create a fake list of users, and another $105,000 to buy a real data package of 4.5 million students from a consulting firm,The merger created a fake list of users, including real identities, that eventually fooled JPMorgan’s M&A team.
In other words, she defrauded JPMorgan Chase of a purchase price of US$175 million, plus a bonus of more than US$20 million, at a fraudulent cost of only US$120,000. It is unbelievable that after such a serious fraud, Jarvis still worked as a business executive in his new employer as if nothing had happened, talking about his successful experience as a successful entrepreneur.
After the scam was thoroughly exposed, JPMorgan Chase fired Jarvis in September last year and filed a lawsuit against him, and the Frank business with only 250,000 users was completely shut down. However, Jarvis subsequently also filed a lawsuit against JPMorgan Chase, accusing the latter of unreasonably firing herself and demanding to pay her millions of dollars in bonuses. It is worth mentioning that the lawyer hired by Jarvis also provided Musk with defense services in the lawsuit of Tesla shareholders because of the privatization tweet claim.
After defrauding JPMorgan, Jarvis’s former partners all chose to pretend they didn’t know her. LionTree, the investment bank that brokered the deal, quietly took down their presentation, and Ground Up, the VC that invested in Frank, deleted the blog that boasted about the investment.
(Years of false past events have been exposed)
The JPMorgan M&A team clearly failed to do their due diligence. A year before they negotiated the acquisition, several members of the U.S. Congress asked the U.S. Federal Trade Commission (FTC) to investigate Frank’s deceptive business operations, and sent a letter warning Frank not to use students’ personal data to obtain new crown relief funds. Ask Forbes Magazine to withdraw its “30 Under 30” honor from Jarvis.
After Jarvis defrauded JPMorgan Chase was exposed, many industry insiders interviewed by the media revealed another image of Jarvis, and it seemed that they were not surprised that Jarvis was fraudulent.”That’s the way she’s always done things, and now she’s getting caught,” said Jarvis’ entrepreneurial partner interviewed by Forbes magazine.
The friend revealed that when Jarvis first started Frank, she bragged to angel investors that her business had thousands of student users, but this was all a lie. When corporate employees raised concerns about Jarvis’s fake practices, Jarvis replied with peace of mind, “Those pedantic people won’t understand. This is the way to start a business. Fake it until you make it real (Fake it ‘ til you make it.)”
In an interview in 2021, Jarvis described herself like this, “As an entrepreneur, I obviously tend to be overly optimistic. Sometimes this will help me, and sometimes it won’t. Of course, sometimes I’m going to present it better than it actually is.”
In fact, Jarvis’s lies are not limited to this acquisition. She flaunted it publicly when she was a Wharton student, receiving and rejecting venture capital mogul Peter Thiel’s Thiel Fellowship venture capital (Note: Thiel offers $100,000 to current students to help them drop out Entrepreneurial fund projects).
But Michael Gibson, an investor who was directly responsible for Thiel’s project at the time, completely denied this claim, saying it was a complete lie of Jarvis. He said, “Jarvis has been bragging about it, but we have never offered her an investment. Because of her personal character, we don’t believe in her project at all. She has been boasting, constantly popping up various names, pretending to be herself. Very knowledgeable about the tech industry.”
Ironically, Jarvis explained that he named the student loan platform Frank because he values integrity very much and hopes to bring trust to users and partners, and Frank means honesty.
(Forbes magazine suffered mockery)
After Jarvis’s arrest, Forbes magazine’s series of lists of young entrepreneurs and future business leaders also became the object of ridicule on social networking sites. Among the future business leaders they selected, there are too many young but daring fraudsters: Sam Bankman-Fried, founder of FTX, a cryptocurrency trading platform suspected of embezzling tens of billions of dollars in customer funds, will treat bow Martin Shkreli, the hedge fund manager whose price of a life-saving drug for insects has been driven up 50 times, Trevor Milton (Trevor Milton), the founder of Nikola, the founder of hydrogen energy vehicle Nikola, who has faked advertisements and has no technology but goes public for financing, and of course the blood of the notorious defrauding investors Elizabeth Homes, founder of the testing company Theranos.
They have succeeded in starting a business at a young age, and are worth billions of dollars, which is envied by others, but now waiting for these fraudsters, without exception, is a prison. Shkley was finally sentenced to seven years in prison (actually five years in prison) and paid $72 million in compensation; Milton was convicted of fraud last year, and the specific sentence has yet to be announced; Holmes was sentenced to 11 years and three months in prison last year , I will report to the prison soon. Bankman, who was arrested late last year, is facing 12 counts of fraud, which carry a maximum sentence of more than 100 years in prison if convicted.
(The Forbes list is ridiculed)
Chris Bakke, a Silicon Valley entrepreneur, said sarcastically, “The young entrepreneurs selected by Forbes 30 Under 30 have raised a total of 5.3 billion US dollars in funding, but the amount involved by fraudsters is as high as 18.5 billion US dollars. Really. Incredible.”
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