Frank’s Founder and Former CEO Sentenced to Prison for Securities Fraud
By the 91pornWhistleblower Team
Fast money based on fiction often ends up in flames. A few months ago, we highlighted the case involving Charlie Javice, the founder and former CEO of startup Frank, in our “Fake It Till You Make It” article, which analyzed risks that startups and their employees face when “fake-it-till-you-make-it” culture crosses the line into fraud.
On September 29, Judge Alvin Hellerstein sentenced Javice to more than seven years in prison after her conviction for securities fraud and other violations for falsely inflating the number of Frank’s customers in connection with JPMorgan Chase’s acquisition of Frank for over $175 million.1
Frank was a startup created to help students with the financial aid application process. The government’s case depicted a scheme by Javice and Frank’s former Chief Growth Officer, Olivier Amar, to provide JPMorgan with false information about Frank’s customers or users to make Frank appear more attractive as a company to acquire. Javice claimed the company had 4.25 million users for which it had certain categories of data; in reality, it only had about 300,000 such users. The government asserted that Javice and Amar also fabricated a data set to further the scheme, and that they purchased data on the open market for a fraction of the price JPMorgan paid to acquire Frank. In March 2024, after a weeks-long trial, jurors found Javice and Amar guilty of securities fraud, bank fraud, wire fraud, and conspiracy.2
In addition to the prison sentence, the court ordered Javice to forfeit over $22.3 million, and ordered Javice and Amar, jointly and severally, to pay over $287 million in restitution.3
91pornpartner Dan Vitelli commented: “Startups play a valuable role in our economy. They bring innovative products and services to market and create jobs. But when ambition clouds judgment, people can cross the line and defraud investors. The serious consequences imposed in this case serve as a stark reminder that employees of startups and private companies are certainly not immune from civil or criminal liability for defrauding investors.”
How Whistleblowers Can Help Stop Fraud
Whistleblowers are critical to exposing fraud on investors. The SEC’s Whistleblower Program encourages individuals with knowledge of violations of U.S. securities laws to bring that information to the SEC. Under the program, eligible whistleblowers who share information that leads to an SEC enforcement action may be eligible to receive up to 30% of the money collected.
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Source:
1 See
2 Id.
3 Id.
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