10/13/2025
Allyssia Finley writes the Life Science column in the WSJ on Mondays. She reflects of recent frauds in her column today.
Does Tricolor’s crash reflect a broader breakdown in due diligence? The Charlie Javice fraud case certainly suggests that may be the case. The 33-year-old fintech entrepreneur last month was sentenced to seven years in prison for swindling JPMorganChase, which purchased her student financial-aid startup in 2021 for $175 million.
The bank later discovered she had inflated her user count more than tenfold. Why didn’t bankers detect this deception earlier? Because they rushed the review.
“Ms. Javice’s case is not the prototypical type of fraud case,” her defense attorney argued. “This case was a 28-year-old versus 300 investment bankers from the largest bank in the world that did due diligence in 22 business days.” He added that “part of the rush was what they called a defensive play, that they didn’t want another bank to get this product.”
Other red flags: The Education Department and Federal Trade Commission had rebuked Ms. Javice’s startup in 2017 and 2020 for misleading customers. JPMorganChase has “a lot to blame themselves” for, the judge said at Ms. Javice’s sentencing hearing. But his job in sentencing her is “punishing her conduct and not JPMorgan’s stupidity.”
In these heady times, stupidity isn’t getting punished by markets any more than fraud.
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