The founder of Frank, Charlie Javice, has been indicted for defrauding JPMorgan Chase in its $175m acquisition of the financial planning site for college students. The indictment includes charges of conspiracy, bank fraud, and wire fraud affecting a financial institution. Prosecutors claim that Javice fabricated data to make $45m from the sale of Frank. JPMorgan filed a fraud complaint against the founder in December, asserting that she had falsified records to show that Frank had over four million members, when in reality, it had less than a tenth of that.
Javice maintains that JPMorgan rushed to buy Frank without conducting due diligence and is trying to deflect attention from student privacy law violations. JP Morgan had previously claimed that it was not obligated to pay Javice’s legal fees for her defense against federal fraud charges. However, Delaware Chancery Court Judge Kathaleen McCormick ruled that the bank had failed to outline a “carve out” that would reduce its obligations.
Javice and Frank’s chief growth and acquisition officer, Olivier Amar, received $26m from the deal. In response to the fraud allegations against them, both Javice and Amar sued JPMorgan for legal fees, claiming that they deserved coverage under the bank’s policies since they became JPMorgan employees after the buyout. The bank argued that the fraud allegations negated its obligations. However, Judge McCormick ruled that the contract language did not support the bank’s argument, and therefore, JPMorgan was ordered to pay Javice’s legal fees.
Javice faces over 100 years in jail if found guilty of the charges. The business she founded was pitched to make filing financial aid forms easier for college students. Prosecutors allege that she “lied directly” to JPMorgan and fabricated data to support those lies. The acquisition was intended to help JPMorgan expand its reach to millennials.
The legal case against Javice is still ongoing, but the recent ruling by Judge McCormick is a significant setback for JPMorgan. The bank’s failure to “carve out” its obligations has led to it being ordered to pay Javice’s legal fees. This outcome could set a precedent for other cases where banks acquire companies without proper due diligence. Students and investors will undoubtedly be watching the developments in this case closely.
In conclusion, JPMorgan has been ordered to pay Charlie Javice, founder of Frank, legal fees following allegations of fraud relating to JPMorgan’s $175m acquisition of the financial planning site for college students. Javice has denied any wrongdoing and asserts that JPMorgan rushed to acquire Frank without due diligence. The case is ongoing, and the recent ruling by Judge McCormick could have implications for other banking acquisitions in the future.
This article was generated by AI. We strive to provide the highest quality content possible and value your feedback. Please let us know if you have any concerns or suggestions regarding this article.
