HomeU.S.Startup CEO charged in $175 million fraud case

Startup CEO charged in $175 million fraud case

The Department of Justice said Tuesday that a digital start-up named Leader, previously regarded as a premier American entrepreneur, had been detained and charged with fraud for allegedly lying to J.P. Morgan Bank.

According to the DOJ, Charlie Javice, a former Forbes magazine “30 Under 30” honoree, was arrested Monday night in New Jersey for lying about the number of consumers her firm served with its student debt help programme.

“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,” U.S. Attorney Damian Williams said in a statement. “This arrest should warn entrepreneurs who lie to advance their businesses that their lies will catch up to them, and this Office will hold them accountable for putting their greed above the law.”

Javice’s spokesman denied the charges, and her lawyer refused to comment.

The new company, Frank, was advertised as a way to make it easier to apply for student loans.Javice is accused of falsifying statistics to make the platform seem to have millions more members in order to sell the firm for $175 million.

She is charged with one count of conspiracy to conduct bank and wire fraud, one count of wire fraud affecting a financial institution, and one count of bank fraud, each having a potential prison term of 30 years. She is also charged with one count of securities fraud, which carries a potential jail term of 20 years.

According to the papers, Javice recruited the assistance of a data scientist to develop a bogus database that was used to persuade JP Morgan that the platform had more than 4.25 million users. The company Leader is also accused of purchasing genuine data on 4.25 million college students and passing it off as its own user data.

Tuesday was Javice’s first time in court. She was given a $2 million bail and told she could only go to certain places in New York and southern Florida.

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