Criminal Trial of ‘Frank’ Founder Charlie Javice to Begin Tuesday
When the criminal trial of Frank Founder Charlie Javice and former Chief Growth Officer Olivier Amar begins Tuesday (Feb. 18), Javice’s defense team will reportedly argue that the criminal case stems from a commercial dispute in which the buyer of the student loan startup, JPMorgan Chase, felt buyer’s remorse.
Javice’s legal team argued in a legal filing that the bank coordinated the investigation with New York prosecutors who brought the criminal case, even before launching its own civil suit, the Financial Times (FT) reported Sunday (Feb. 16).
“The government worked intimately with JPMC, despite the bank’s reputational stake in the outcome of the case as the acquirer,” the filing by the Javice team said, according to the report.
In their own filing, prosecutors said they “conducted an extensive, independent investigation of the allegations in this case,” per the report.
Prosecutors allege that Javice and Amar fraudulently induced JPMorgan Chase to buy Frank by paying a data scientist to manufacture accounts to make it look like Frank, which helped college students apply for financial aid, had 10 times as many users as the company actually had, according to the report.
JPMorgan paid $175 million for the company in 2021, expecting to gain access to millions of users to whom it could cross-sell banking products, the report said.
Javice was arrested on fraud charges in April 2023 but has been free on $2 million bail, per the report.
The trial in the criminal case brought by New York is expected to last four weeks, according to the report.
The September 2021 acquisition of Frank came about a year after JPMorgan Chase CEO Jamie Dimon said the bank would be “much more aggressive” in its approach to acquisitions. The bank also added FinTechs with expertise in sustainable investing, robo-advising and constructing tax-efficient portfolios.
In January 2023, JPMorgan Chase brought a lawsuit against Javice saying that she and Amar defrauded the bank by inflating the number of customers who were using the platform. The bank said in its lawsuit that it made the acquisition believing Frank had about 4.3 million customers but later learned that the platform had only about 300,000 customers.
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