Charlie Javice has joined an undesirable club struck by the “Forbes 30 Under 30 curse”, a term for the high-flyers identified by the business title as up-and-comers who ended up in legal trouble. The entrepreneur has joined a list that includes the pharmaceuticals fraudster Martin Shkreli and FTX’s Sam Bankman-Fried and Caroline Ellison.
The strength of the Forbes “curse” will be tested this week in New York as Javice, 31, goes on trial on four counts of fraud relating to the $175m (£141m) sale of Frank, a student financial aid application assistance company she founded aged 24, to JP Morgan Chase. The deal quickly soured, and has descended into a legal wrangle that has been compared to the case of Theranos founder Elizabeth Holmes.
Frank’s premise was simple – to help steer students through the complexity of applying for student loans. In 2021, four years after the New Yorker started the business, she sold up to JP Morgan. She was installed as JP Morgan’s head of student solutions, was paid a $300,000 annual salary and pocketed $21m in stock proceeds, and was awarded a $20m retention bonus.
Just over a year later, the banking company sued her, claiming that the database of users reported by Frank was largely a fabrication. In 2023, federal prosecutors filed criminal charges accusing Javice of repeatedly making up claims that Frank had lined up 4.25 million student customers, when in fact she had data for only about 300,000, to “fraudulently induce” the bank to buy the company.
The government contends that Javice had first asked Frank’s director of engineering to create an artificially generated, or synthetic, dataset of the company’s users. When the director questioned the legality of the request, her co-defendant Olivier Amar said: “Yes, it’s legal. We don’t want to end up in orange jumpsuits.”
According to the indictment, JP Morgan discovered the alleged fraud after receiving only a few responses when it emailed out new customer marketing materials to Frank’s list of names. After Javice was fired she sued JP Morgan for legal expenses related to an internal investigation and for letting her go soon before she was eligible for the $20m retention bonus.
Jamie Dimon, the JP Morgan chief executive and one of the world’s most powerful bankers, later described the acquisition of the financial wellness platform as a “huge mistake”. In early 2023, JP Morgan shut Frank down.
The criminal case now coming before a jury carries echoes of the prosecution of Holmes, whose Silicon Valley startup claimed to perform hundreds of blood tests using a pinprick of blood. Holmes is serving an 11-year prison sentence for defrauding investors.
Javice’s case is also reminiscent of the failed prosecution of the British tech tycoon Mike Lynch – who died along with his daughter Hannah and four other passengers, in a tragic boating accident last summer – on fraud charges in connection with the $11.1bn acquisition of Autonomy by Hewlett-Packard in 2011. HP is continuing the lawsuit against Lynch’s estate.
In all three cases, competing claims of fraud and buyers’ remorse run alongside civil and criminal actions.
But last week, the US district trial judge, Alvin Hellerstein, ruled that prosecutors could not introduce a pair of WhatsApp messages between Javice and Amar, in which Javice described Holmes’s defrauded investors as “sophisticated assholes”, and that “investors should be blamed”.
“Investors should be blamed on letting a 19-year-old go rogue,” Javice commiserated with Amar in the messages, referring to Holmes.
Juda Engelmayer, a spokesperson for Javice, said the only similarities with Holmes are that both are “young, good-looking and savvy, and that’s the only comparison”.
“This is a case of due diligence. JP Morgan knew what they were getting into and buyer’s remorse once they got into it. There was no misrepresentation because there’s a difference between people who passed through the website and people who actually signed on to the website to get information.
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“JP Morgan was interested in this [Frank] because it got them in touch with the younger generation that they could tap into for financial planning. They weren’t going into [it] for altruistic reasons to help young people get student loans,” Engelmayer added.
According to the governance expert Charles Elson, JP Morgan had a due diligence obligation to look before leaping into the deal. “Either they did their due diligence and the truth was hidden from them, or they may have done their due diligence, and were given full access to the open and honest books but interpreted the results wrong,” he said.
At a pretrial hearing, prosecutors revealed that Amar plans to testify against Javice at trial and will argue that she “concealed information and deceived him”.
According to prosecutors, Javice contends that this turns Amar into a “second prosecutor”, and requested that the trials be separated. Javice’s attorneys have also petitioned against a pause in a separate Securities and Exchange Commission’s civil lawsuit, claiming that a delay deprives her of “exculpatory evidence”.
Outside the legal framework, the trial may provide, as the FTX case did, further insights into the go-go nature of tech entrepreneurship which had emerged when the business was founded. Javice and Amar had raised $20m from investors including Marc Rowan, a co-founder and the chief executive of Apollo Global Management and Gingerbread Capital, a firm specialising in female-led businesses.
Javice told Business Insider in 2021 that she divided her time between Miami and New York, starting her days with a run and a pilates class and ending them with sunset yoga and a swim. She would often take a mid-afternoon screen break to “go out into the wild” to ask people about their student loans, she said.
“If you see an opportunity, don’t be afraid to jump,” she said. “My impatience to achieve my goals helped me see past that ‘conventional wisdom’ to take a risk that landed me where I am today.”
In November 2022, Javice was on the Forbes 30 Under 30 list, and a year later, the magazine placed her into its “Hall of Shame”.
