Millennial App Founder Arrested for Fraud in $175 Million JPMorgan Deal Pleads Not Guilty The SEC alleges Frank founder Charlie Javice lied about her financial aid app's user base to push forward the sale.
But the acquisition has since turned into a nightmare for Javice, who was arrested in April and charged by the U.S. Securities and Exchange Commission for allegedly defrauding JPMorgan Chase, CNN Business reported.
Now, Javice is pleading not guilty to the charges of conspiracy, wire fraud and bank fraud; the plea was entered through her lawyer late last week, AP News reported.
The bank filed a lawsuit against Javice in December; it accused her of fabricating a list of four million users with the help of a professor and artificial intelligence. But Javice claimed the bank was trying to cover up its own failed strategy and countersued for damages and $27.9 million in compensation she says she's owed, The Wall Street Journal reported.
In a complaint filed to a New York District Court, the SEC stated that Javice convinced JPMorgan Chase her app had 4.25 million users — when it actually had fewer than 300,000. The SEC's investigation found that Javice pilfered "$9.7 million directly in stock proceeds, millions more indirectly through trusts, and a contract entitling her to a $20 million retention bonus" via the 2021 sale.
"Rather than help students, we allege that Ms. Javice engaged in an old school fraud: she lied about Frank's success in helping millions of students navigate the college financial aid process by making up data to support her claims, and then used that fake information to induce JPMC to enter into a $175 million transaction," said Gurbir S. Grewal, director of the SEC's division of enforcement.