Fraud by an Ivy League Graduate
Frank CEO Charlie Javis
The world's largest investment bank, JP Morgan Chase, was defrauded of billions of won by a 20-something entrepreneur. Following the Theranos case, considered the worst fraud in Silicon Valley history, a major investment bank has once again fallen victim to a scheme led by a prestigious university graduate.
According to local foreign media reports on the 13th, on the 28th of last month (local time), the U.S. District Court in Manhattan, New York, found Charlie Javis (32), CEO of the student loan management startup Frank, guilty.
Charlie Javis, founder of the student loan management startup company Frank, was arrested on charges of deliberately altering customers' personal information and using it for purposes other than the original business intent. Javis is accused of manipulating the number of customers to JP Morgan and causing the bank to acquire the company for as much as $175 million (approximately 260 billion won). With this verdict, Javis could face up to 30 years in prison.
Just three years ago, Javis was a promising Ivy League entrepreneur. According to The Wall Street Journal (WSJ), Javis was born into a wealthy French immigrant family in New York City. He attended private schools frequented by affluent families and majored in finance at the Wharton School of the University of Pennsylvania.
After graduation, he ventured into entrepreneurship. He created a program to simplify college financial aid. Later, leveraging his network from Wharton, he secured millions of dollars in investment from well-known venture capitalists. Javis also actively used media to build his reputation, gaining fame through appearances on the economic news channel CNBC. After selling Frank, he was selected for Forbes' '30 Under 30' list of young entrepreneurs under 30.
After emerging as a promising entrepreneur, JP Morgan acquired Frank around the summer of 2021 after competition with Capital One, Discover, and Citibank. Subsequently, Javis was appointed Executive Director at JP Morgan, overseeing student-related projects.
Charlie Javis was arrested on charges of deliberately altering customers' personal information and using it for purposes other than the original business intent. Photo captured from Forbes homepage.
Less than a year after the acquisition, JP Morgan filed a lawsuit claiming that Frank's customer information had been manipulated. The New York prosecutor stated that Javis and another Frank executive, Olivier Amar, provided JP Morgan with falsified customer data.
During the trial, it was revealed that Javis instructed Frank employees to manipulate data, but when an employee refused, he hired an external researcher for $18,000 (approximately 26 million won). Through this, the number of customers was inflated from 300,000 to 4.25 million.
Javis's side argued, "JP Morgan knew the number of Frank's customers when acquiring the company and is now raising issues because the U.S. Department of Education changed the FAFSA (Free Application for Federal Student Aid) method." On the other hand, JP Morgan countered that they verified Frank's customer data through a third-party company at the time of acquisition but found nothing suspicious.
Meanwhile, foreign media are comparing this case to that of Elizabeth Holmes (41), CEO of Theranos. Holmes founded the healthcare startup Theranos and promoted that "250 types of disease tests are possible with a single drop of blood," but this was proven false. Holmes was sentenced to 11 years in prison in 2022 and is currently serving her sentence.
© The Asia Business Daily(www.asiae.co.kr). All rights reserved.
