NEW YORK (AP) — Charlie Javice, the founder of startup Frank, was sentenced on Monday to more than seven years in prison for defrauding JPMorgan Chase by exaggerating her company’s customer base, resulting in a $175 million loss for the banking giant.
Javice, 33, received her sentence in Manhattan federal court from Judge Alvin K. Hellerstein, who determined she had orchestrated a “large fraud” in 2021. She falsely claimed that Frank served over 4 million students, while the actual number was below 300,000, according to the judge.
In the courtroom, Hellerstein acknowledged Javice's commendable charitable efforts, such as organizing soup kitchens for the homeless at a young age, but emphasized the seriousness of her fraudulent actions.
Defense attorney Ronald Sullivan highlighted that Javice’s venture operated effectively, contrasting her situation with that of Elizabeth Holmes, who faced scrutiny over the failure of her company, Theranos. Sullivan argued that JPMorgan’s oversight failures played a role in the circumstances leading to the fraud.
Prosecutors, seeking a 12-year sentence for Javice, noted her prior texts where she expressed disbelief over Holmes receiving over 11 years in prison. They argued that she was driven by greed, as she stood to gain $29 million from the sale of her company.
Javice, in her statement during sentencing, expressed deep regret, acknowledging that her choices have transformed something meaningful into infamy. She apologized to all affected, including investors and JPMorgan’s shareholders.
Since her arrest in 2023, Javice had been free on bail. Following her conviction on conspiracy, bank fraud, and wire fraud charges, her case has drawn attention to the alarming trend of fraud among startup founders.
Amid a backdrop of growing scrutiny in the startup realm, prosecutors urged that fraud in startup sales will be penalized under all circumstances, emphasizing the need for accountability in entrepreneurial contexts.
