JPMorgan Ordered to Pay Frank Founder’s Legal Fees

JPMorgan Chase

J.P. Morgan Chase must pay the legal fees of a disgraced FinTech founder it is suing.

That’s according to a court ruling Monday (May 8), the latest development in the ongoing case involving the world’s largest bank and Charlie Javice, accused fraudster and founder of the financial planning platform Frank.

According to multiple published reports, the court ruling said J.P. Morgan is still obligated to cover Javice’s legal fees as part of her agreement to sell Frank to the bank in 2021.

J.P. Morgan Chase sued Javice in January, saying it was defrauded when it bought her company because she and another executive inflated the number of customers using the platform, claiming Frank had more than 4 million customers when it had just 300,000.

The suit alleges Javice had someone create millions of fake accounts to mislead the bank and received money from the $175 million sale she would not have otherwise gotten.

Lawyers for Javice have countered that J.P. Morgan Chase didn’t perform due diligence, rushed into the sale and began an internal investigation of the deal to terminate her and deny her a retention bonus.

Last month, the Department of Justice charged Javice with bank fraud, wire fraud and securities fraud, charges that could put her in prison for decades if she’s convicted. She was also charged with fraud by the Securities and Exchange Commission.

“Rather than help students, we allege that Ms. Javice engaged in an old school fraud,” SEC Enforcement Division Director Gurbir S. Grewal said in April. “She lied about Frank’s success in helping millions of students navigate the college financial aid process by making up data to support her claims, and then used that fake information to induce JPMC to enter into a $175 million transaction.”

Last month also saw J.P. Morgan Chase ask permission to question Javice under oath about transfers of money to a company she allegedly created.

The bank said the transfers took place shortly after J.P. Morgan Chase discovered the alleged fraud and that the corporation to which she transferred the money is in a state — Nevada — often used by individuals who want to conceal their ownership information.

Javice’s attorneys argued that their client can’t hide assets, as they were seized by the government around April 7, when J.P. Morgan Chase submitted its motion to question Javice.

“Around the same time, the United States seized Ms. Javice’s assets and has blocked her from access to her accounts — the same assets that JPMC now suggests are at risk of dissipation,” Javice’s attorneys said in a court filing. “The seizure warrants for accounts and assets under Ms. Javice’s control are currently under seal.”