JPMorgan Chase must pay the legal fees for Frank founder Charlie Javice in her defence against a lawsuit from the US banking group, which has alleged that she defrauded the company when it paid $175mn to acquire her financial aid start-up.
A Delaware court ruled on Monday that JPMorgan was obliged to cover Javice’s legal fees as part of her agreement to sell her company, Frank, to the bank in 2021.
JPMorgan sued Javice in December, alleging that she told the bank that her company had 4.25mn customers when in fact it had only 300,000. Javice was then charged in April with fraud by US prosecutors who also allege she falsified user numbers as part of the sale. She is also facing a civil suit from the Securities and Exchange Commission.
Frank helped college students apply for financial aid for their education. JPMorgan paid $175mn for the company through its Chase retail banking division with the aim of giving the lender greater access to younger customers. It was one of a number of smaller acquisitions it made around that time.
After the deal, Javice joined JPMorgan as a managing director, but the bank terminated her contract for cause in November. Prosecutors have alleged that Javice stood to make $45mn from the sale of Frank, which she founded in 2016 and was backed by Apollo Global Management’s Marc Rowan.
A JPMorgan spokesperson said after the ruling that the bank would “continue to focus on the main issue of addressing our fraud claims . . . through the legal process”.
Javice has been in talks with prosecutors about a potential resolution to the criminal case, according to court records last week.
The ruling was first reported by Bloomberg.
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