Former start-up founder charged by prosecutors for defrauding JPMorgan Chase; ‘diligence crucial,’ says Shruti Gurudanti, Rose Law Group partner, director of corporate transactions

By Ron Lieber | New York Times

Charlie Javice, the 31-year-old start-up founder who JPMorgan Chase accused in a December lawsuit of lying to the bank as it prepared to acquire her company, is now facing criminal charges as well.

On Tuesday, the U.S. attorney’s office for the Southern District of New York charged her with wire, bank and securities fraud. It said that she “falsely and dramatically” exaggerated the number of customers that Frank, her now shuttered college financial planning company, actually had in a scheme to “fraudulently induce J.P. Morgan Chase to acquire” her start-up for $175 million.

JPMorgan had made similar accusations after acquiring Frank, which claimed to help millions of students and families more easily file for financial aid.

Ms. Javice, a Miami Beach resident, was arrested on Monday evening at Newark Airport in New Jersey.

Three of the charges she faces each carry a maximum sentence of 30 years in prison. A spokesman said that she denied the allegations. Her lawyer, Alex Spiro, declined to comment, as did JPMorgan.

According to the federal prosecutors’ complaint — and a similar one that the Securities and Exchange Commission also filed Tuesday — Ms. Javice inflated data to make it appear that the company had over four million customers when it had only a small fraction of that.


“Investors can’t afford lapses in diligence. Especially angel and small investors. The recent string of cases from Elizabeth Holmes to FTX reveals how some of the savviest VC firms are not doing the type of rigorous diligence they should be doing before making an informed investment decision. Spending the time, money and effort upfront and having an experienced team looking into the opportunity upfront is crucial, even if it some times means losing a deal to a competing firm.”

Shruti Gurudanti, Rose Law Group partner, director of corporate transactions

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