UNICAF University, Goldman Sachs Investment (Scholarships in Africa)
g at xny.io
Tue Apr 4 11:43:53 PDT 2023
Dear Goldman Sachs:
Are you aware of any such activities mentioned below at your investment in
Former Start-Up CEO Charged In $175 Million Fraud
April 4, 2023
FOR IMMEDIATE RELEASE
Tuesday, April 4, 2023
Former Start-Up CEO Charged In $175 Million Fraud
Former CEO of Frank Charged with Making False Claims and Submitting False
Data to J.P. Morgan Chase in $175 Million Acquisition Fraud Scheme
Damian Williams, the United States Attorney for the Southern District of
New York, and Patricia Tarasca, the Special Agent in Charge of the New York
Regional Office of the Federal Deposit Insurance Corporation’s Office of
the Inspector General (“FDIC-OIG”), announced the unsealing of a criminal
Complaint charging CHARLIE JAVICE with falsely and dramatically inflating
the number of customers of her company, Frank, in order to fraudulently
induce J.P. Morgan Chase (“JPMC”) to acquire Frank for $175 million.
JAVICE, who appeared on the Forbes 2019 “30 Under 30” list, stood to gain
over $45 million from the fraud.
JAVICE was arrested last night in New Jersey and will be presented later
today before U.S. Magistrate Judge Barbara Moses.
U.S. Attorney Damian Williams said: “As alleged, Javice engaged in a brazen
scheme to defraud JPMC in the course of a $175 million acquisition deal.
She 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.”
FDIC-OIG Special Agent in Charge Patricia Tarasca said: “The allegations
described in today’s criminal Complaint exemplify the many ways banks can
be defrauded. The FDIC-OIG remains committed to holding individuals
accountable who threaten the integrity of financial institutions, and we
thank our law enforcement partners for their diligence and dedication to
investigating such crimes.”
According to the Complaint unsealed today in Manhattan federal court:
In or about 2017, JAVICE founded TAPD, Inc., d/b/a Frank (“Frank”), a
for-profit company that offered an online platform designed to simplify the
process of filling out the Free Application for Federal Student Aid
(“FAFSA”). FAFSA is a federal government form, available free of charge,
that students use to apply for financial aid for college or graduate
school. JAVICE was Frank’s CEO.
In or about 2021, JAVICE began to pursue the sale of Frank to a larger
financial institution. Two major banks, one of which was JPMC, expressed
interest and began acquisition processes with Frank. JAVICE represented
repeatedly to those banks that Frank had 4.25 million customers or “users.”
JAVICE explicitly defined “users” — to both banks — as individuals who had
signed up for an account with Frank and for whom Frank therefore had at
least four identified categories of data (i.e., first name, last name,
email address, and phone number). In fact, Frank had less than 300,000
When JPMC sought to verify the number of Frank’s users and the amount of
data collected about them — information that was critical to JPMC’s
decision to move forward with the acquisition process — JAVICE fabricated a
data set. To do this, JAVICE and a co-conspirator (“CC-1”) first asked
Frank’s director of engineering to create an artificially generated data
set (a so-called synthetic data set). The director of engineering raised
concerns about the legality of the request, to which JAVICE responded, in
substance and in part, “We don’t want to end up in orange jumpsuits.” The
director of engineering declined the request.
JAVICE then approached an outside data scientist and hired him to create
the synthetic data set. After the data set was created, JAVICE provided
that synthetic data set to an agreed-upon third-party vendor in an effort
to confirm to JPMC that the data set had over 4.25 million rows. JAVICE
then caused the third-party vendor to convey to JPMC that the data set had
over 4.25 million rows, consistent with JAVICE’s misrepresentations that
Frank had 4.25 million users.
In reliance on JAVICE’s fraudulent representations about Frank’s users,
JPMC agreed to purchase Frank for $175 million. As part of the deal, JPMC
hired JAVICE and other Frank employees. JAVICE received over $21 million
for selling her equity stake in Frank and, per the terms of the deal, was
to be paid another $20 million as a retention bonus.
Unbeknownst to JPMC, at or about the same time that JAVICE was creating the
fabricated data set, JAVICE and CC-1 sought to purchase, on the open
market, real data for over 4.25 million college students to cover up their
misrepresentations. JAVICE and CC-1 succeeded in purchasing a data set of
4.5 million students for $105,000, but it did not contain all the data
fields that JAVICE had represented to JPMC were maintained by Frank. JAVICE
then purchased an additional set of data on the open market in order to
augment the data set of 4.5 million users. After JPMC acquired Frank, JPMC
employees asked JAVICE and CC-1 to provide data relating to Frank’s users
so that JPMC could begin a marketing campaign to those users. In response,
JAVICE provided what was supposedly Frank’s user data. In fact, JAVICE
fraudulently provided the data she and CC-1 had purchased on the open
market at a small fraction of the price that JPMC paid to acquire Frank and
its purported users.
* * *
JAVICE, 31, of Miami Beach, Florida, is charged with one count of
conspiracy to commit bank and wire fraud, one count of wire fraud affecting
a financial institution, and one count of bank fraud, each of which carry a
maximum sentence of 30 years in prison, and one count of securities fraud,
which carries a maximum sentence of 20 years in prison.
The maximum potential sentences in this case are prescribed by Congress and
are provided here for informational purposes only, as any sentencing of the
defendant will be determined by the judge.
Mr. Williams praised the outstanding investigative work of the Special
Agents from the U.S. Attorney’s Office for the Southern District of New
York and from FDIC-OIG.
The case is being handled by the Office’s Complex Frauds and Cybercrime
Unit, and Assistant U.S. Attorneys Micah F. Fergenson and Dina McLeod are
in charge of the prosecution.
The charges contained in the Complaint are merely accusations and the
defendant is presumed innocent unless and until proven guilty.
 As the introductory phrase signifies, the entirety of the text of the
Complaint and the description of the Complaint set forth herein constitute
only allegations, and every fact described should be treated as an
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