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Roula Khalaf, Editor of the FT, selects her favorite tales on this weekly e-newsletter.
A fintech start-up founder was convicted of defrauding JPMorgan Chase by overstating the worth of a scholar mortgage enterprise it purchased from her, finishing a surprising fall from grace for the millennial entrepreneur and an embarrassing chapter for the financial institution.
Charlie Javice was arrested two years in the past on fraud prices over the $175mn sale of her firm Frank in 2021, which helped college students making use of for monetary support.
Prosecutors accused Javice and her co-defendant, Olivier Amar, Frank’s former chief progress officer, of paying a knowledge scientist to magnify the dimensions of Frank’s person base. JPMorgan claimed it was informed Frank had greater than 4mn clients when in actuality the corporate solely had a couple of hundred thousand.
Javice and Amar face years in jail. Attorneys for the pair didn’t instantly reply to requests for remark.
On the trial, which lasted six weeks, prosecutors depicted Javice and Amar as utilizing a “fraud spreadsheet” to point out their firm had much more customers than it really did to induce JPMorgan to purchase the enterprise. The Wall Avenue financial institution paid Javice $21mn for her Frank stake, with the supply of an additional $20mn retention bonus that was by no means paid.
Javice’s lawyer argued JPMorgan had purchaser’s regret in regards to the deal and tried to retrospectively declare it had been duped. The financial institution additionally sued Javice in a separate civil case, which was paused through the legal continuing.
The trial was marked by notable witnesses, together with Apollo International chief government Marc Rowan, who was an early investor in Frank, executives from JPMorgan and Capital One, which had additionally been bidding for the corporate, and an funding banker from LionTree, which had acted as Frank’s monetary adviser within the sale.
JPMorgan Chase CEO Jamie Dimon, who didn’t testify within the trial, had described the deal for Frank as a “large mistake”.
