Charlie Javice, the 31-year-old founder of now-shuttered student loan software company Frank, has been arrested by law enforcement authorities after being charged with fraud by federal prosecutors.
Javice, whom Forbes named a rising star in its "30 under 30" issue in 2019, was arrested in New Jersey on Monday, the U.S. Department of Justice
announced on Tuesday. She faces three charges of fraud and one charge of conspiracy.
The Securities and Exchange Commission also filed a civil complaint alleging that Javice lied about having data on 4 million clients, including making up fake client information, in order to entice JPMorgan Chase to buy her company in 2021 for $175 million.
According to the SEC's
complaint, JPMorgan was eager to buy Frank because the company claimed to have contact information — including names, emails and phone numbers — for over 4 million students, a pool of potential new customers the bank wanted to reach.
But those numbers were a lie, authorities allege. Frank only had data for about 300,000 customers, and Javice made up the 4.2 million others with the help of a local data science professor, the SEC's complaint alleges.
Javice, along with an unnamed Frank executive, "engaged in a months-long scheme to fabricate the data that both of them knew JPMC was paying $175 million to acquire," the complaint said.
Javice, via a lawyer, denied the allegations.
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