JP Morgan says Frank's Javice moved millions to a shell company: Report

By Bob Van Voris

JPMorgan Chase & Co. said Frank founder Charlie Javice transferred millions of dollars to a shell company after the bank discovered it had been defrauded in its acquisition of her college financial planning site.
 

In a court filing in Delaware, where JPMorgan is suing Javice, 31, for fraud, the bank asked a judge for permission to question her under oath and seek evidence about the transfers to Chariot Holdings X LLC. She allegedly set up the Nevada company in September.

JPMorgan claimed in its December suit that Javice and another Frank executive faked data greatly inflating Frank’s customer count to mislead the bank into buying her company for $175 million in 2021. 

Javice was hit earlier this month with criminal fraud charges and a Securities and Exchange Commission suit based on similar allegations.

The bank said in its Tuesday filing that Javice’s transfers out of JPMorgan accounts took place shortly after she had been put on administrative leave from her position as head of student solutions. That followed an internal investigation that discovered her fraud, according to JPMorgan.

“Javice’s use of a Nevada shell corporation is a particular concern,” JPMorgan claimed in its Tuesday filing. “For many years now, Nevada has been a popular jurisdiction for individuals who are seeking to hide ownership information and evade tax obligations.”

A lawyer for Javice didn’t immediately respond to an email seeking comment on JPMorgan’s claim. Javice, who is free on a $2 million bond, has not yet responded in court to the criminal charges or the SEC suit. She’s denied JPMorgan’s claims in its lawsuit and is countersuing. 

Her lawyer, Alex Spiro, said last month in a letter to JPMorgan’s counsel that the bank was improperly “spying” on her financial activities. “There is nothing about her transfer of certain funds out of her Chase accounts that ‘suggests misconduct’ or any effort to shield her assets from litigation recovery.”

‘Massive CYA’
 

The bank said it paid $21 million of the $175 million purchase price to Javice and that she made two transfers of “several million dollars” each to Chariot X, in September and December.

Javice is separately suing JPMorgan in state court in Delaware to force the bank to cover her legal fees. She argues that the bank rushed to buy Frank without doing proper due diligence and was also trying to deflect attention from its violations of student privacy laws. She alleges the bank launched an internal investigation of the Frank deal as a pretext to fire her as its head of student solutions and deny her a $20 million retention bonus.

The bank’s suit is “a massive ‘CYA’ effort by those responsible inside JPMC to shift the blame for a failed and now-regretted acquisition to someone they view as an easy target: its young female founder,” Javice claimed in a February court filing. 

Read more: Jamie Dimon Calls JPMorgan’s Frank Acquisition a ‘Huge Mistake’

Javice was charged by Manhattan federal prosecutors with conspiracy, wire fraud affecting a financial institution and bank fraud, each of which carries a maximum sentence of 30 years in prison if Javice is convicted. She was also charged with securities fraud, which has a 20-year maximum.

The case is JPMorgan Chase Bank v. Javice, 22-cv-01621, US District Court, District of Delaware (Wilmington)