On March 28, 2025, a New York jury delivered a landmark conviction in the case between JPMorgan Chase Bank (JPMC) and Charlie Javice, the founder of TAPD Inc. doing business as “Frank”, a student financial aid platform. The case offers critical insights into the limits of seller representations, the necessity of forensic due diligence, and the legal consequences of fraudulent misstatements by founders during due diligence.
Facts
In 2021, JPMorgan Chase acquired Frank for $175 million, in an M&A transaction, seeking to deepen its footprint in the student financial services market. As part of the deal, Javice represented that Frank had over 4.25 million active users. JPMorgan Chase relied on these representations to justify the acquisition and proceeded to onboard the platform.
However, post-acquisition testing revealed serious anomalies. Amongst others, emails sent to the purported user base returned at an unusually high bounce rate. Further internal audits suggested that the actual number of legitimate users was closer to 300,000.
Among others, evidence presented in court showed that Javice had (a) Paid an external data science professor $18,000 to create a synthetic user dataset to inflate Frank’s metrics (b) Bought user data from external Data Compiler (c)Submitted falsified information during the acquisition process to deceive JPMorgan Chase and its financial advisers.
The U.S. Department of Justice (DOJ) and the Securities and Exchange Commission (SEC) initiated criminal and civil actions against Javice in 2023. She was arrested, charged with securities fraud, wire fraud, bank fraud, and conspiracy, and later released on $2 million bail.
The Court’s Decision
On March 28, 2025, Javice was convicted on all counts. The jury found that she had knowingly made false representations about Frank’s user base, with intent to induce JPMorgan Chase into a sale based on fabricated data. The court ruled that the fraudulent acts constituted a deliberate scheme to deceive a financial institution, investors, and regulators.
Sentencing is scheduled for August 26, 2025. Javice faces a potential custodial sentence, with federal sentencing guidelines expected to consider both the scale of the fraud and its financial impact on JPMorganChase.
Legal and Commercial Implications
The case sets a sobering precedent for both founders and investors. For acquirers in an. M&A transaction, the case reaffirms the necessity of deep technology and legal diligence not only reviewing dashboards and self-reported KPIs, but also demanding direct data source access (e.g. PSP logs, CRM databases).
For founders, the case is a reminder that representations and warranties in M & A acquisition agreements are binding legal commitments. Misstatements, even if framed as aspirational metrics, can result in criminal liability.
