Charlie Javis, the 31-year-old start-up’s founder, is now also facing criminal charges in a December lawsuit filed against him for lying to the bank as JPMorgan Chase prepared to acquire his company.
On Tuesday, the U.S. Attorney’s Office for the Southern District of New York He accused her Along with wire, bank and securities fraud. It said Frank “falsely and dramatically” exaggerated the number of Frank clients at the now-shuttered college financial planning firm, which was in a “fraudulent takeover” of JPMorgan Chase for $175 million.
JP Morgan made similar allegations after acquiring Frank, which it said would help millions of students and families more easily file for financial aid.
Ms. Javis, who lives in Miami Beach, was arrested Monday evening at Newark Airport in New Jersey.
The three charges he faces carry a maximum sentence of 30 years in prison. He denied the allegations, a spokesman said. His attorney, Alex Spiro, declined to comment, as did JP Morgan.
According to a complaint by federal prosecutors — and A similar one The Securities and Exchange Commission filed on Tuesday.
According to the government’s claims, the scheme involved hiring a professor to create fake accounts in an attempt to trick JPMorgan into thinking it actually had four million users.
The U.S. attorney’s complaint includes a slide titled “Frank Thesis,” taken from a company presentation intended to attract potential investors or acquirers. The company boasts that it’s an “acquisition machine” that “knows more about our students than any lender, college or employer.”
In fact, according to the government, Ms. Javis oversaw efforts to create fictitious customer lists by obtaining names, contact information and other data from third-party companies. Frank then transferred those names to JP Morgan as one of its existing clients.
In JP Morgan’s case, the bank said it became suspicious when a marketing experiment using Frank’s data failed miserably. The company also sued Oliver Amar, Frank’s chief development and acquisitions officer.
Mr. Amar was not named in the complaints unsealed on Tuesday. He and his lawyer did not return messages seeking comment.
According to two government complaints, Ms. When Frank’s director of engineering questioned the legality of one of Javis’s data handling requests, he replied that no one would come to it “in an orange jumpsuit.” He refused to accept the request.
The terms of the JPMorgan acquisition and subsequent retention agreement, according to lawyers, include Ms. Now, the SEC looking for Force her to forfeit “all ill-gotten gains” including interest, and pay fines.
“Even non-public, early-stage companies must be truthful in their representations,” Gurbir S. Grewal, director of the SEC’s enforcement division, said in a statement. “If they fall short, we will hold them accountable, just like in this case.”