NATIONAL NEWS

Student aid startup founder arrested on fraud charges

Apr 4, 2023, 8:17 AM | Updated: 3:22 pm

NEW YORK (AP) — The founder of Frank, a student loan assistance startup company that J.P. Morgan Chase acquired for $175 million two years ago, has been arrested on charges that she duped the financial giant by dramatically inflating the number of customers her company had, authorities said Tuesday.

Charlie Javice, 31, of Miami Beach, Florida, was arrested Monday night in New Jersey on conspiracy, wire and bank fraud charges.

A charging document in Manhattan federal court said she claimed her company had over four million users when it had fewer than 300,000 customers.

Authorities said Javice, who appeared on the Forbes 2019 “30 Under 30” list, would have earned $45 million from the fraud.

Javice and her lawyer declined to comment as they left court after Javice signed a $2 million bond and agreed to curfew and possible electronic monitoring if court officers decide it is necessary. She also agreed not to contact key figures in the case — including investors — except for her mother and her mother’s boyfriend.

In a release, U.S. Attorney Damian Williams said Javice “engaged in a brazen scheme” to defraud the acquiring financial company by fabricating data to support lies she told in a bid to make tens of millions of dollars from the sale of her company.

“This arrest should warn entrepreneurs who lie to advance their businesses that their lies will catch up to them,” he said.

According to a criminal complaint, Javice in 2017 founded TAPD Inc., which operated under the name Frank, to provide an online platform to simplify the process of filling out the Free Application for Federal Student Aid, a free federal government form used by students to apply for financial aid for college or graduate school.

In 2021, Javice sought to sell her company in her role as its chief executive to a large financial institution, the complaint said.

When JPMC sought to verify that her company had 4.25 million customers, Javice asked her company’s director of engineering to create an artificially generated data set, but the individual declined, it said.

She then hired an outside data scientist to create the synthetic data set as she purchased for $105,000 on the open market real information for over 4.25 million students, the complaint said. But it added that the data she purchased did not contain all of the information she had told JPMC was maintained by Frank.

In a civil complaint filed by the Securities and Exchange Commission, the regulatory agency alleged that Javice made numerous misrepresentations about Frank’s alleged millions of users to entice JPMC to purchase the now shuttered Frank.

Gurbir S. Grewal, director of the SEC’s Division of Enforcement, said in a release that “even non-public, early-stage companies must be truthful in their representations.”

He added: “Rather than help students, we allege that Ms. Javice engaged in an old school fraud: she lied about Frank’s success in helping millions of students navigate the college financial aid process by making up data to support her claims, and then used that fake information to induce JPMC to enter into a $175 million transaction.”

National News

Associated Press

6 people, including 3 children, killed in a Georgia house fire, authorities say

NEWNAN, Ga. (AP) — Six people, including three children, were killed in a fire that destroyed a home southwest of Atlanta early Monday, the local coroner said. The children’s ages were 6, 12 and 13, the Coweta County Coroner’s Office told The Atlanta Journal-Constitution. The oldest victim was 70, authorities said. Their identities were not […]

20 minutes ago

Associated Press

Man on fishing trip drowns trying to retrieve his keys from a lake. Companion tried to save him

HASTINGS, N.Y. (AP) — A man drowned in a lake in upstate New York after his keys fell into the water and he tried to retrieve them, police said. Anthony Davis, 44, was fishing with two other men in Oneida Lake in the town of Hastings just before 10 a.m. Sunday when Davis’ keys fell […]

38 minutes ago

Associated Press

Lawmakers seek health care and retirement protections for Steward Health Care workers

BOSTON (AP) — A group of Democratic members of Congress, led by Sen. Edward Markey of Massachusetts, is seeking reassurances that workers at hospitals owned by Steward Health Care will have their health care and retirement benefits protected. Steward last month said it plans to sell off all its hospitals after announcing that it filed […]

1 hour ago

Associated Press

University of Michigan didn’t assess if Israel-Hamas war protests made environment hostile, feds say

WASHINGTON (AP) — The University of Michigan failed to assess whether protests and other incidents on campus in response to the Israel-Hamas war created a hostile environment for students, staff and faculty, according to the results of an investigation by the U.S. Education Department announced Monday. The department’s Office of Civil Rights investigated 75 instances […]

2 hours ago

Associated Press

Crews working in sweltering conditions and steep terrain battle major Los Angeles-area wildfire

GORMAN, Calif. (AP) — Strong winds pushed flames through dry brush in mountains along Interstate 5 north of Los Angeles, and officials warned residents in the wildfire’s path to be prepared to leave if it explodes in size again. Los Angeles County’s first major wildfire of the year swiftly grew to nearly 23 square miles […]

9 hours ago

Associated Press

US severe weather: Heat moves east, storms threaten Plains, snow falls in the Rockies

PHOENIX (AP) — Hot and cold extremes are expected this week in the U.S. Officials warned residents from coast to coast to take precautions as a heat wave moved east, while heavy rains and flooding could drench the Gulf states and snow threatens parts of the Rockies and Northwest. Extreme heat spread across Arizona, New […]

10 hours ago

Student aid startup founder arrested on fraud charges