Charlie Javice, the charismatic founder of a startup company that claimed to be revolutionizing the way college students apply for financial aid, was convicted on Friday of defrauding one of the largest US banks, JPMorgan Chase, out of $175 million by exaggerating her customer base by 10 times. A jury in New York City returned its verdict after a five-week trial. Javice, 32, faces the possibility of a lengthy prison term, per the AP. Javice was in her mid-20s when she founded Frank, a company with software that promised to simplify the process of filling out the Free Application for Federal Student Aid, or FAFSA, a complex government form used by students to apply for aid for college or graduate school.
The company promoted itself as a way for financially needy students to obtain more aid faster, in return for a few hundred dollars in fees. JPMorgan executives testified that Javice told them she had more than 4 million clients and would have about 10 million by year's end, but it turned out there were only about 300,000 customers. Javice's lawyer, Jose Baez, told the jury that JPMorgan made up the fraud allegations due to buyer's remorse after government regulatory changes made the data it received in the deal useless to its hopes of gaining new young customers.
JPMorgan was interested in acquiring Frank partly because of the potential it saw in the startup's supposedly huge list of satisfied customers. The bank believed those young, future college graduates could potentially be sold on the idea of a lifelong partnership with the financial institution. After buying the company, however, JPMorgan said it found evidence Javice had lied about her number of customers.
story continues below
Prosecutors said Javice paid a college friend $18,000 to use a computer program to create millions of fake names with pedigree information. The results were sent to a third-party data provider that JPMorgan hired to verify the number of customers, but the data provider never checked to ensure the people were real, testimony showed. Baez said the bank knew what it was getting and that the number of customers was in the hundreds of thousands rather than in the millions. "JPMorgan is not telling the truth," he said. "They knew the numbers."
(More
JPMorgan Chase stories.)
,
uBlock 
,
and
Ghostery 
)
