Charlie Javice sentenced to 7 years for defrauding bank

Charlie Javice, founder of a startup acquired by JPMorgan Chase in 2021 for $175 million, was sentenced to just over seven years in prison Monday for defrauding the bank by overstating how many customers the fintech firm had.

In March, a 12-person jury found Javice and her chief growth officer Olivier Amar guilty on three counts of fraud and one count of conspiracy to commit fraud. Prosecutors had sought a sentence of 12 years.

Javice, 33, cried as she delivered an emotional statement to the court Monday. Standing to address the judge, Javice said she felt profound remorse for her actions and asked for forgiveness from JPMorgan, employees of the startup, shareholders and investors.

At one point, Javice turned and directly addressed her family, sitting in the front row, to apologize and thank them for what she called unwavering support.

“I will spend my entire life regretting these errors,” Javice said.

“I’m asking with all of my heart for forgiveness,” she said. “I ask your Honor to temper justice with mercy … I will accept your judgment with dignity and humility.”

Judge Alvin Hellerstein told Javice her words were “very moving” and that the way she’s devoted her life is “highly commendable,” but that he couldn’t give her the forgiveness she sought.

“I sentence people not because they’re bad, but because they do bad things,” Hellerstein told Javice before delivering the 85-month prison sentence. “I don’t think you’ll be committing other crimes and that you’ll be devoting your life to service, but others have to be deterred.”

In addition to prison, Javice was sentenced to three years of supervision, along with $22.36 million in forfeiture and $287 million in restitution to JPMorgan. She will remain out on bail while she appeals the ruling.

JPMorgan bought the startup, called Frank, to help the biggest U.S. bank by assets market its financial products to students. Frank was a digital platform that helped students apply for financial aid. In September 2021, JPMorgan told CNBC in an exclusive interview on the deal that the fintech firm had served more than five million students since Javice founded it.

But months after the deal closed, JPMorgan discovered that Frank had fewer than 300,000 real customers; the rest were synthetic identities created by Javice with the help of a data scientist.

Javice was arrested in 2023 on charges that she defrauded JPMorgan in the deal. Details that emerged later showed that Frank employees expressed disbelief when Javice directed them to boost their customer roster before the acquisition.

The week before selling her company to JPMorgan, Javice directed an employee to fabricate millions of users. When the employee declined, Javice reassured him, according to testimony given earlier this year.

“She said: ‘Don’t worry. I don’t want to end up in an orange jumpsuit,'” the employee testified.

On Monday, Javice’s attorney Ronald Sullivan argued for a lighter sentence for his client, making the case that Frank helped customers. He contrasted the case against that of Elizabeth Holmes of Theranos infamy, whose fraud he said had “dangerous medical consequences,” and who was sentenced to 135 months in prison.

“Ms. Javice’s sentence should be nowhere near Elizabeth Holmes,'” Sullivan told Judge Hellerstein.

Assistant U.S. Attorney Micah Fergenson disagreed, arguing that Javice’s crime was fueled by greed.

“JPMorgan didn’t get a functioning business, they acquired a crime scene,” Fergenson said.

The episode was embarrassing for JPMorgan, which was thought to be one of the most sophisticated of corporate acquirers. Concerned about threats from fintech and big tech firms, the bank, led by CEO Jamie Dimon, went on a shopping spree of smaller fintech firms starting in 2020.

But JPMorgan, eager to edge out rivals bidding for the startup, failed to confirm that Frank actually had millions of customers before shelling out $175 million for the company.