Apollo's Rowan: Javice described 'enthusiastic' Dimon chat

Bloomberg

Apollo Global Management's billionaire co-founder Marc Rowan testified that he personally invested in Charlie Javice's student-finance startup, Frank, because he thought she and her team "seemed excellent."

Rowan, who also served on Frank's board, took the stand Thursday in Manhattan federal court as the first witness for the defense at Javice's trial on charges that she defrauded JPMorgan Chase & Co. when it acquired Frank for $175 million in 2021. He described conversations he and Javice had during her discussions with the bank, including about a one-on-one meeting she had with JPMorgan Chief Executive Officer Jamie Dimon.

Javice told him the tone of her Dimon meeting was "very enthusiastic," Rowan said on the stand, adding that he played no role in arranging it.

Prosecutors claim Javice, 32, falsified data to show JPMorgan that Frank had more than 4.2 million users when it had actually had fewer than 300,000. Her lawyers have argued that the data accurately represented web traffic and that JPMorgan was not interested in user numbers in any case. They have claimed the bank rushed the deal because it feared a rival would buy the site.

Rowan backed up the defense claim about user numbers, saying Frank counted as customers "anyone who came to the website." Witnesses who participated in the deal for JPMorgan have said they were told Frank defined users as those who registered their names, email addresses and phone numbers.

"Users, customers, website visitors: one and the same," Rowan said, referring to his experience investing in internet companies including AOL and Yahoo. "I'm pretty used to these terms being used interchangeably."

In August 2021, Javice told Rowan, either informally or in a board meeting, about a data request by JPMorgan, Rowan said Thursday. She talked about "how overwhelmed the company was" responding to the request, he testified.

Around that time, prosecutors claim, Javice and her co-defendant, Frank executive Olivier Amar, hired a statistics Ph.D. to create "synthetic data" showing millions of users that they submitted to JPMorgan. After the acquisition closed in September 2021, the two allegedly purchased low-quality data from third parties to cover their tracks.

A JPMorgan marketing executive testified on Monday that a July 2022 email pitch sent to 400,000 supposed Frank users only yielded 10 new checking account customers.

Rowan spent the early part of his roughly 45 minutes on the stand describing what attracted him to Frank. He led a $10 million funding round for Frank in December 2017 and participated in another $5 million round in 2020.

He said Frank's potential lay in "the aggregation of students" in the site, which offered assistance with course selection as well as financial aid. Rowan also said that he was impressed by Javice.

"She seemed to have an interesting take on how to attack the education marketplace," he said. "Charlie and their team seemed excellent."

Wharton grads

Rowan's presence on Frank's board, along with venture capitalist Michael Eisenberg, was cited by the defense at the beginning of trial as showing the company was a legitimate and credible business.

"They saw a young female CEO who was breaking the glass ceiling, and breaking it big time," defense lawyer Jose Baez said of Rowan and Eisenberg in his Feb. 20 opening statement.

Like Javice, Rowan is a graduate of the University of Pennsylvania's Wharton School, where he earned both a bachelor's degree and an MBA. He was reported to have been on President Donald Trump's short list for Treasury Secretary.

Rowan was spotted entering the courthouse on Wednesday, apparently waiting to be called as a witness, but was not called to the stand until the following day.

Javice and Amar have both pleaded not guilty. Defense lawyers have argued the two had no intent to defraud the banks and say that JPMorgan didn't care about Frank's user numbers when it bought the company. Amar's team has also sought to distance him from his former boss by showing that he wasn't involved in key meetings and communications.

The case is U.S. v Javice, 23-cr-00251, US District Court, Southern District of New York (Manhattan).