But the acquisition has since turned into a nightmare for Javice, who was arrested Monday night and charged by the U.S. Securities and Exchange Commission for allegedly defrauding JPMorgan Chase, CNN Business reported.
The bank filed a lawsuit against Javice in December; it accused her of fabricating a list of four million users with the help of a professor and artificial intelligence. But Javice claimed the bank was trying to cover up its own failed strategy and countersued for damages and $27.9 million in compensation she says she’s owed, The Wall Street Journal reported.
In a complaint filed to a New York District Court, the SEC stated that Javice convinced JPMorgan Chase her app had 4.25 million users — when it actually had fewer than 300,000. The SEC’s investigation found that Javice pilfered “$9.7 million directly in stock proceeds, millions more indirectly through trusts, and a contract entitling her to a $20 million retention bonus” via the 2021 sale.
“Rather than help students, we allege that 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,” said Gurbir S. Grewal, director of the SEC’s division of enforcement.
Charged 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, Javice faces decades in prison if convicted.