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By Tatiana Bautzer
NEW YORK (Reuters) - The criminal trial of Charlie Javice for allegedly defrauding JPMorgan Chase into buying her college financial aid startup Frank began on Thursday, with her lawyer arguing there was no fraud and the banking giant merely had "buyer's remorse."
Javice, 32, has pleaded not guilty to securities fraud, wire fraud, bank fraud and conspiracy over JPMorgan's $175 million purchase of Frank in July 2021.
Prosecutors accused Javice of lying by assuring the largest U.S. bank that Frank had 4.25 million customers when it had only about 300,000.
JPMorgan allegedly discovered the inflated number when it tried to contact customers it believed were real to sell products, and received far fewer responses than expected.
Jose Baez, a lawyer for Javice, told jurors during his opening argument in Manhattan federal court that JPMorgan undertook extensive due diligence into Frank, and knew how many clients it had before completing the purchase.
He said JPMorgan claimed it was hoodwinked only a year later when financial aid regulations changed, and fraud was the only condition that allowed it to back out from the sale contract.
Earlier, prosecutor Rushmi Bhaskaran said in her opening argument that Javice collected fake names and addresses from a college friend because JPMorgan required the data.
Bhaskaran also said Javice's co-defendant Olivier Amar, who was Frank's chief growth officer, bought "sham lists" of student data from third parties for Frank to falsely pass off as customers.
"It was through their lies that they became multimillionaires," Bhaskaran said.
Jonathan Cogan, a lawyer for Amar, told jurors his client was "out of the loop" during negotiations with JPMorgan.
Javice, a Florida resident, studied at the University of Pennsylvania's Wharton School, and appeared on Forbes magazine's "30 Under 30" list in 2019.
The trial is before U.S. District Judge Alvin Hellerstein, who seated jurors and alternates earlier on Thursday.
JPMorgan CEO Jamie Dimon has called the Frank acquisition a "huge mistake."
The bank declined on Thursday to comment on the trial.
Founded in 2017, Frank was marketed as a tool to help simplify college financial aid for students and parents.
Javice had discussed a transaction with another bank, Capital One, before turning to JPMorgan, Amar's lawyer said.
(Reporting by Tatiana Bautzer; Editing by Jamie Freed)