The founder of Frank faces four criminal charges from the Department of Justice tied to claims of “falsely and dramatically inflating” the fintech’s client numbers prior to its 2021 sale to JPMorgan Chase for $175 million.
The DoJ said in a press release that Charlie Javice was arrested on Monday. The release said Javice, Frank’s CEO, stood to gain more than $45 million from the alleged fraud.
Javice was charged with conspiracy to commit bank and wire fraud, wire fraud affecting a financial institution, bank fraud and securities fraud. Each of the first three charges carries a maximum sentence of 30 years in prison, while the charge of securities fraud has a maximum 20-year prison sentence.
“As alleged, Javice engaged in a brazen scheme to defraud” JPMorgan Chase, U.S. Attorney Damian Williams said in the release.
“She lied directly to JPMC and fabricated data to support those lies,” Williams added. “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.”
The Federal Deposit Insurance Corp’s Office of the Inspector General has also been involved in the investigation.
The release alleged that Javice repeatedly claimed to potential buyers that Frank had 4.25 million customers when it actually had less than 300,000 users. The complaint alleged that Javice and an outside data scientist fabricated data to support the claims.
JPMorgan Chase, as part of the deal, hired Javice and other Frank employees. The complaint alleged that Javice received more than $21 million for selling her equity stake in Frank and was set to receive another $20 million as a retention bonus.
The Securities and Exchange Commission filed a separate complaint against Javice. The SEC claimed that Javice received $9.7 million in stock proceeds and millions more through trusts.
JPMorgan Chase, which recently shut down the college financial planning platform, filed a lawsuit in January alleging it was duped into overpaying for the company.
Javice’s lawyer has disputed the bank’s allegations. She filed a lawsuit against JPMorgan Chase last year, alleging that the bank fired her to get out of paying her a $20 million retention bonus.