Don’t count out Charlie Javice, the 31-year-old founder of financial aid site Frank, just yet. Javice has won her fee advancement case against JPMorgan Chase, which means one of the world’s biggest banks must pay her mounting legal fees.
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Attorneys for Javice and JPMorgan Chase held a call Monday with Kathaleen St. Jude McCormick, the Delaware Chancery Court judge overseeing the case, who ruled for the entrepreneur, executives said. Judge McCormick concluded that JPMorgan Chase was legally obligated to cover Javice’s legal bills, Bloomberg reported.
JPMorgan Chase must also pay the legal fees of Olivier Amar, Frank’s chief growth officer, who also sued the bank to cover his legal fees.
“We continue to focus on the main issue of addressing our fraud claims against Ms. Javice and Mr. Amar through the legal process,” said Pablo Rodriguez, a spokesman for JPMorgan Chase.
A Javice spokesman declined to comment.
For months, Javice has been waiting for Judge St. Jude McCormick to decide if JPMorgan Chase must pay her legal fees. Javice sold her financial aid startup Frank to JPMorgan Chase in September 2021 for $175 million. That month, she joined the bank as a managing director, head of student solutions, but was placed on administrative leave in September 2022, and was fired the following November, according to JPMorgan Chase and Javice legal documents.
In December, Javice sued the bank in Delaware Chancery Court, claiming JPMorgan Chase terminated her employment at Frank without cause and should be required to pay her legal fees, costs, and expenses, according to her claim against the bank. Just days later, JPMorgan Chase sued Javice in Delaware District Court, alleging the entrepreneur lied about the number of customers Frank had when the bank acquired the company. Javice allegedly told JPMorgan Chase that Frank had 4.25 million customers, but in reality, the company had about 300,000, according to JPMorgan Chase’s version of events as spelled out in legal documents. Amar, who was fired by JPMorgan in October 2022, sued the bank in January to have them cover his legal fees.
Javice’s legal bills have mounted since then. In April, federal prosecutors arrested the entrepreneur, and she was released on a $2 million bond. The Department of Justice filed criminal charges against her, charging Javice with separate counts of conspiracy to commit wire and bank fraud, wire fraud, and bank fraud, each of which carries a maximum sentence of 30 years in prison, according to the lawsuit. She was also charged with one count of securities fraud, which carries a maximum sentence of 20 years in prison. The Securities and Exchange Commission, in a separate lawsuit, also charged Javice with fraud for making “numerous misrepresentations” about Frank’s users.
Last week, the DOJ revealed that Javice was in talks with the U.S. attorney’s office for a “possible disposition” of the case. This means the parties are working on a resolution, which could involve a dismissal of the charges or a plea, a criminal attorney told Fortune.
The fee verdict on Monday is a big win for Javice, who has been running out of money. The biggest source of Javice’s wealth was presumably her cut of the money she made from selling Frank for $175 million. After they arrested Javice in April, federal prosecutors seized Javice’s assets and blocked her from accessing them, according to an April 21 court filing from Javice. Certain financial institutions have frozen Javice’s bank accounts, including her brokerage account that contained a majority of her available funds, said Michael Barlow, an attorney with law firm Abrams & Bayliss, in an April 12 letter to Judge St. Jude McCormick. “As a result, Ms. Javice’s ability to access funds to enforce her advancement rights, to defend herself in the Delaware Federal Action, and to defend the DOJ and SEC Actions, has become imperiled,” Barlow said in the letter.
If Javice had not won the ruling, she would have no way to pay for her attorneys and would be without legal representation, a person familiar with the situation said.
The ruling is also the latest win for Alex Spiro, a partner at law firm Quinn Emanuel Urquhart & Sullivan, who is representing Javice. Spiro is known as Elon Musk’s personal attorney; he helped quash a 2019 defamation lawsuit against the billionaire when Musk called a British diver a “pedo guy” during a Twitter fight, the Washington Post reported. Spiro was also part of Alec Baldwin’s legal team after the actor was charged with involuntary manslaughter following a fatal shooting incident on a movie set.
This story was originally featured on Fortune.com
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Source: https://finance.yahoo.com/news/frank-founder-accused-fraud-notches-173253948.html