A Manhattan judge didn’t hold back, using unusually blunt language to describe JP Morgan’s bankers as victims of a massive fraud, but at the same time chiding them for their “stupidity”. According to a report from Business Insider, US District Judge Alvin K Hellerstein sentenced fintech founder Charlie Javice to seven years in prison and ordered her to pay $287.5 million in restitution.It was halfway through the hearing that the judge began his scathing criticism of the bank’s due diligence. “What consideration should be given for JPMorgan Chase’s very poor due diligence?” Hellerstein asked. But he went on to add that Fraud remains a fraud “whether you outsmart someone who is smart or someone who is a fool.”

Charlie Javice, the 20-something women CEO who ‘fooled’ JP Morgan

Javice, who once appeared on Forbes’ “30 Under 30” list, was found guilty of defrauding America’s largest bank JP Morgan Chase in the 2021 sale of her startup, Frank. The bank paid $175 million for the company, believing it had access to a database of 4 million college students. It was later revealed that Javice had fabricated the data, using a computer programmer to create a fake list of users.JP Morgan did not discover the fraud until a year after the acquisition was finalized, despite a team of 300 in-house diligence officers vetting the deal. The prosecution described Frank as “a crime scene,” not a viable business.Javice, who had previously attracted high-profile investors, even managed to secure one-on-one meeting with JP Morgan CEO Jamie Dimon.

What Charlie Javice’s lawyers said in her defense

During the sentencing, the judge was unswayed by the defense’s argument that JP Morgan, a bank worth nearly $4 trillion, should have known better. In a striking statement, Judge Hellerstein declared that his job was “punishing her conduct and not JPMorgan’s stupidity.” He emphasized that “fraud remains a fraud, whether you outsmart someone who is smart or someone who is a fool.”The defense had pointed to trial evidence showing that one bank executive had scoffed at the sale price, calling it “nothing.” Yet, the judge insisted that blaming the victim, even a banking giant, was irrelevant. “Whether you outsmart someone who is indifferent or someone who is careful, it’s the conduct,” he said.