JPMorgan Chase must pay legal fees for Frank’s founder Charlie Javice in his defense against a lawsuit by the US banking group, which it said defrauded the company when it paid $175 million to acquire its aid start-up financial.
A Delaware court ruled on Monday JP Morgan she was required to cover Javice’s legal fees as part of her deal to sell her company, Frank, to the bank in 2021.
JPMorgan sued Javice in December, claiming it told the bank its firm had 4.25 million customers when in reality it only had 300,000. Javice was then charged in April with defrauding by US prosecutors who also say they faked user numbers as part of the sale. He is also facing a civil suit from the Securities and Exchange Commission.
The ruling applies to attorneys’ fees in JPMorgan’s lawsuit against Javice, but Javice’s attorneys can request that this be extended to include his defenses in government cases.
Frank has helped college students apply for financial aid for their education. JPMorgan paid $175 million for the firm through its Chase retail banking division with the goal of giving the lender greater access to younger customers. He was one of many smaller ones acquisitions did during that time.
After the deal, Javice joined JPMorgan as chief executive, but the bank terminated her contract for cause in November. Prosecutors said Javice allegedly made $45 million from the sale of Frank, which she founded in 2016 and was endorsed by Marc Rowan of Apollo Global Management.
In its lawsuit against JPMorgan, Javice denied allegations that it falsified user data. He put up his own Miami Beach apartment to secure a $2 million court-mandated bail in exchange for his release from custody.
A JPMorgan spokesperson said after the ruling that the bank “will continue to focus on the core issue of addressing our fraud complaints. . . through the judicial process”.
Javice has been in discussions with prosecutors about a potential termination of the criminal case, according to court documents from last week.
The ruling was first reported by Bloomberg.
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