A grand jury has issued an indictment in the case of Frank, a Fintech that helped college students gain access to grants and loans, and its founder Charlie Javice. The charges include bank fraud, wire fraud, conspiracy, and securities fraud while demanding the forfeiture of millions of dollars held by Javice.
According to the filing, funds held in various accounts by Javice have already been seized.
Frank was sold to JP Morgan (NYSE:JPM) for $175 million, creating a gain for shareholders, including Javice, who is said to have received gross proceeds of $45 million. Javice is reportedly free on a $2 million bond.
Javice allegedly misled JP Morgan in its acquisition of the company by fabricating the number of actual accounts held by Frank, which inflated the value of the company.
When the case was announced last April, U.S. Attorney Damian Williams stated:
“She [Javice] lied directly to JPMC and fabricated data to support those lies — all in order to make over $45 million from the sale of her company. This arrest should warn entrepreneurs who lie to advance their businesses that their lies will catch up to them, and this Office will hold them accountable for putting their greed above the law.”
The Securities and Exchange Commission has also filed civil charges. The SEC’s complaint alleges:
“…Javice orchestrated a scheme to deceive JPMC into believing that Frank had access to valuable data on 4.25 million students who used Frank’s service when in reality the number was less than 300,000.”
Javice has countersued JP Morgan.
