NEW YORK (AP) — Charlie Javice, the founder of a startup company that sought to dramatically improve how students apply for financial aid, was sentenced Monday to more than seven years in prison for cheating JPMorgan Chase out of $175 million by greatly exaggerating how many students it served.
Javice, 33, was sentenced in Manhattan federal court for her March conviction by Judge Alvin K. Hellerstein, who said she committed “a large fraud” by duping the bank giant in the summer of 2021. She made false records that made it seem the company, called Frank, had over 4 million customers when it had fewer than 300,000, Hellerstein found.
The judge said Javice had assembled a “very powerful list” of her charitable acts, which included organizing soup kitchens for the homeless when she was 7 years old and designing career programs for formerly incarcerated women.
In court papers, defense lawyers noted that Javice has faced extraordinary public scrutiny, reputational destruction and professional exile, “making her a household name” in the same way Elizabeth Holmes became synonymous with her blood-testing company, Theranos.
Defense attorney Ronald Sullivan told Hellerstein that his client was very different from Holmes because what she created actually worked, unlike Holmes, “who did not have a real company” and whose product “in fact endangered patients.”
In seeking a 12-year prison sentence for Javice, prosecutors cited a 2022 text Javice sent to a colleague in which she called it “ridiculous” that Holmes got over 11 years in prison.
Hellerstein largely dismissed arguments that he should be lenient because the acquisition pitted “a 28-year-old versus 300 investment bankers from the largest bank in the world,” as Sullivan put it.
Still, the judge criticized the bank, saying “they have a lot to blame themselves” after failing to do adequate due diligence. He quickly added, though, that he was “punishing her conduct and not JPMorgan’s stupidity.”
Sullivan said the bank rushed its negotiations because it feared another bank would acquire Frank first.
A prosecutor, Micah Fergenson, though, said JPMorgan “didn’t get a functioning business” in exchange for its investment. “They acquired a crime scene.”
Fergenson said Javice was driven by greed when she saw that she could pocket $29 million from the sale of her company.
“Ms. Javice had it dangling in front of her and she lied to get it,” he said.
Given a chance to speak, Javice said she was “haunted that my failure has transformed something meaningful into something infamous.” She said she “made a choice that I will spend my entire life regretting.”
