The founder of a millenial app has been arrested on fraud charges after selling the app for a whopping $175 million.
On Monday evening (3 April), Charlie Javice - the founder of the student financial assistance startup Frank - was arrested and charged by the US Securities and Exchange Commission for allegedly defrauding JPMorgan Chase in the massive buyout of her company.
In a complaint filed to a New York District Court, Janice apparently misled JPMorgan Chase into thinking that Frank had 4.25 million users, which would obviously make it incredibly popular.
However, in reality, Frank reportedly had fewer than 300,000 users, with JPMorgan Chase allegedly paying the price for an app more than ten times the size of that.
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Gurbir S. Grewal, director of the SEC’s Division of Enforcement, said in a statement: "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."
Meanwhile, Manhattan US Attorney Damian Williams added that Javice engaged in a 'brazen scheme to defraud' JPMorgan Chase.
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"She lied directly to JPMC and fabricated data to support those lies — all in order to make over $45 million from the sale of her company," Williams stated.
Back in December, JPMorgan Chase filed a lawsuit to a Delaware court claiming that Javice lied about “Frank’s success, Frank’s size, and the depth of Frank’s market penetration."
However, Javice denied the claims and ended up counting suing in February, according to The Wall Street Journal.
Following her arrest, Javice appeared in court on Tuesday (4 April) after she was charged with with one count of conspiracy to commit banking and wire fraud, one count of wire fraud, one count of bank fraud and one count of securities fraud.
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Following proceedings, the 31-year-old was released on a $2 million bond and could face a very long time in prison if she is found guilty.
In fact, if Javice is convicted, she could face decades behind bars.
The Frank founder, who holds both US and French citizenship, has surrendered both of her passports as part of an agreement with prosecutors, according to Bloomberg.
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Javice is also limited to travelling between New York City and South Florida for the duration of her bail period.
Callum Jones