Frank Founder Charlie Javice to Face Trial in 2024 for Alleged Fraud Involving JPMorgan
Charlie Javice, accused of tricking JPMorgan into acquiring her now-closed college financial aid venture, Frank, is set to face trial in October 2024, as ordered by U.S. District Judge Alvin Hellerstein in New York. The judge emphasized the need for prosecutors to push JPMorgan Chase for additional evidence that could support Javice's defense. JPMorgan shut down the college financial aid platform it bought for $175 million in January after it found that 70% of marketing emails sent to a batch of 400,000 customers bounced back, as per CNBC.
Allegations against Charlie Javice
Facing charges of securities fraud, wire fraud, bank fraud, and conspiracy since May, Javice has entered a not-guilty plea and is currently on a $2 million bond. Prosecutors allege that she significantly inflated Frank's customer numbers to persuade JPMorgan to purchase the company, claiming over 4 million customers when the actual count was only a fraction of that, in the hundreds of thousands.
Court documents reveal that Javice allegedly concocted this inflated figure by presenting JPMorgan with a list of fictitious names and emails. Frank, established in 2017 by Javice, was acquired by JPMorgan in 2021, and as part of the deal, the bank hired Javice and other Frank employees. Javice reportedly received over $21 million for selling her stake in the startup, along with a $20 million retention bonus.
Investigation of Frank and the trial
In a filing last October, Javice asserted that JPMorgan had not produced numerous documents, including an internal assessment of the Frank acquisition, an internal investigation of Frank, and internal communications among JPMorgan staff. She claimed that the government's response seemed intentionally inactive, suggesting that JPMorgan held essential and potentially exculpatory materials that the government was choosing not to collect.
According to Javice, the government appeared satisfied with building its entire case based on JPMorgan's selectively provided set of documents. This adds a layer of complexity to the legal proceedings, raising questions about the completeness and accuracy of the evidence presented by both sides in the impending trial.
Despite federal prosecutors claiming they've already handed over all pertinent documents to both the government and the defense, recent court documents have revealed ongoing disputes in the case against Charlie Javice. In response to JPMorgan's compliance with subpoenas, prosecutors argued that the bank, like other subpoena recipients, has been cooperative.
Request additional documentation and evidence
However, in a recent ruling, Judge Hellerstein has mandated that federal prosecutors push JPMorgan Chase to further search for and produce emails and documents linked to any JPMorgan officers or employees mentioned in the complaint. This directive is to be executed under the existing subpoenas, and the judge has set a deadline for the production of these documents by the end of next week.
The complexity of the case is underscored by JPMorgan CEO Jamie Dimon's acknowledgment of the acquisition of Frank as a "huge mistake" during a January conference call, as reported by Reuters. This admission aligns with the subsequent closure of Frank by the bank in January.
Court proceedings and decision
The ongoing legal tussle will continue with prosecutors and the defense reconvening for their next status conference scheduled for January. The court's insistence on additional document production suggests that the intricacies of the case are far from being resolved, setting the stage for further developments in the upcoming court proceedings.