Founder of student aid startup Frank pleads not guilty to fraud

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This article was published 22/05/2023 (1230 days ago), so information in it may no longer be current.

NEW YORK (AP) — With an indictment and a not-guilty plea, the fraud case against the founder of a student loan assistance startup company that J.P. Morgan Chase acquired for $175 million two years ago took a step toward trial on Monday in a New York court.

Charlie Javice, 31, entered the plea through her lawyer to an indictment returned late last week in Manhattan federal court charging her with conspiracy, wire fraud and bank fraud.

The Miami Beach, Florida, resident who founded Frank appeared at a remote proceeding in which her face and the faces of defense lawyers and prosecutors were projected onto a video screen before U.S. Magistrate Judge Gabriel Gorenstein. He said her next appearance was scheduled for June 6 before a judge who would preside over a trial.

Javice, who is free on $2 million bail, is charged with tricking JPMC into buying her company by producing data to make it seem like Frank had over 4.25 million customers when it had fewer than 300,000 clients. At the time of her early April arrest, authorities said she would have earned $45 million from her fraud.

In early May, the deadline to bring an indictment against Javice was postponed as prosecutors filed a letter to say that the government wanted another 30 days to “engage in further discussions with counsel about the disposition of this case.”

Although negotiations of this sort sometimes result in deals, the indictment was a signal that the case was now on the road to trial for a woman who had appeared on the Forbes 2019 “30 Under 30” list of young professionals whose impactful careers seemed to be on an upward trajectory worthy of admiration.

Her lawyer, Alex Spiro, may have reflected the acrimonious atmosphere reflected by the breakdown of talks and the arrival of the indictment late last week when he complained that prosecutors have not turned over any evidence in the case.

“We’ve gotten nothing,” he said.

Assistant U.S. Attorney Dina McLeod noted that the indictment was fresh.

“This is a complex case,” she said, adding that the large number of documents that will be turned over to the defense before trial needs to be reviewed by prosecutors first.

The indictment largely mirrored a criminal complaint released when Javice was arrested. It charged her with conspiracy to commit wire fraud and bank fraud along with separate wire fraud, bank fraud and securities fraud counts.

In 2017, Javice 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 federal government form used by students to apply for financial aid for college or graduate school, authorities said.