NEW YORK (AP) — Charlie Javice, the founder of the financial aid startup Frank, was sentenced to more than seven years in prison for defrauding JPMorgan Chase out of $175 million by falsely inflating student enrollment numbers. At her sentencing on Monday in Manhattan federal court, Judge Alvin K. Hellerstein denounced her actions as a large fraud conducted in the summer of 2021. She had claimed her company served over 4 million students, while the real figure was below 300,000.
Despite Javice's history of charitable initiatives, Judge Hellerstein emphasized the severity of her deceitful actions. The court noted her well-documented past, including organizing soup kitchens and creating career programs for women re-entering society post-incarceration.
Javice's defense attorney argued that her case should not be compared to that of Elizabeth Holmes, who faced a longer sentence for her involvement in the failed blood-testing company Theranos, stating that Javice’s creation had actually delivered a service that worked. However, prosecutors emphasized that what Javice signed in the deal with JPMorgan was, ultimately, a fraudulent enterprise.
Javice was found guilty of conspiracy, bank fraud, and wire fraud, and as she addressed the court, she expressed her deep regrets, admitting her actions transformed a promising venture into a cautionary tale of greed and deception.
The need for accountability was echoed by prosecutors, who sought a lengthy sentence to denote that fraud in the startup world would be treated seriously, sending a loud message to other entrepreneurs. They added that Javice's actions were not merely personal failings but part of a worrying trend among young tech executives misrepresenting ventures to attract investments and buyers.
As her lawyer pointed out, Javice had faced severe public fallout, becoming well-known similar to the infamous Theranos founder. Yet, he stated that the motivations behind her actions were complex and not purely malicious. In light of her fall from grace, Javice has been under scrutiny since her arrest in 2023, before which she lived freely on bail.
