The Securities and Exchange Commission has brought charges of fraud against the creator of Frank, a company that provided assistance with student loans but has since gone out of business. It is said that Charlie Javice gave JPMorgan Chase Bank, National Association (JPMC) false information when he sold Frank to the bank for $175 million in 2021.
The SEC asserts that Javice intentionally misled JPMC into believing that Frank had access to important data on 4.25 million students who had utilized its service, when in fact the amount was fewer than 300,000.
Securities and Exchange Commission Outline
The Securities and Exchange Commission says that Javice made some false claims about Frank’s user base to get JPMC’s attention. As the talks went on, JPMC asked for data about Frank’s clients. It is said that Javice, with the help of Frank’s director of engineering, tried to create fake data to make it look like the company had 4.25 million customers. After getting a no from the director, Javice is said to have hired a professor of data science to make up the data needed to close the deal with JPMC.
According to the Securities and Exchange Commission’s investigation, Javice received millions of dollars in indirect income from the sale of Frank’s stock via trusts and a contract, in addition to the $9.7 million in direct income from the sale of Frank’s stock. They gave her a $20 million retention bonus as a new employee of JPMC. Also, because Javice was hired by JPMC, she was given a $20 million bonus for staying with the company.
Gurbir S. Grewal, who is in charge of Securities and Exchange Commission enforcement, said that Javice lied about Frank’s success in helping millions of students get financial aid for college and made up data to get JPMC to agree to the $175 million deal. Javice is also accused of lying about how well he has helped students get money for college.
The complaint says that Javice broke parts of the Securities Act of 1933 and the Securities Exchange Act of 1934 that are meant to stop fraud.
The complaint also names trusts held by Javice as relief defendants in the case. The Securities and Exchange Commission is looking for civil penalties, injunctive relief, a restriction on the defendant from serving as an officer or director, disgorgement, and prejudgment interest.
Wesley Wintermyer and Lindsay S. Moilanen were in charge of investigating for the Securities and Exchange Commission, and Tejal D. Shah was in charge of supervising their work. Nancy Brown, Mr. Wintermyer, and Ms. Moilanen are the ones in charge of the litigation right now. During the investigation, the Securities and Exchange Commission thanked the US Attorney’s Office for the Southern District of New York and the FBI for their help.
Read more: CECILIA BEACH BROWN at LINCOLN FINANCIAL SECURITIES CORPORATION – View Complaints, Disclosures, Scams and Audit Report (Updated 2023)
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