JPMorgan Chase’s lawsuit against Frank founder Charlie Javice — in which the bank alleges the fintech CEO inflated the value of her company to persuade JPMorgan’s to buy it — is on hold pending her criminal trial, a federal judge ruled Thursday.
The criminal case against Javice and Frank’s former chief growth officer Olivier Amar will likely move faster than the lawsuit and will likely resolve issues relevant to JPMorgan’s lawsuit, necessitating the stay, Judge Josh Wolson of the U.S. District Court for the District of Delaware wrote Thursday.
“It may hasten settlement. And it might obviate the need for this case altogether,” Wolson wrote.
Javice and Amar face a battery of charges — including conspiracy, wire fraud, bank fraud and securities fraud — over what federal prosecutors called a “brazen scheme to defraud [JPMorgan] in the course of a $175 million acquisition deal.”
Upon charging Javice in April, Damian Williams, the U.S. Attorney for the Southern District of New York, said Javice lied directly to JPMorgan executives about the financial position of her college-aid app and “fabricated data to support those lies — all in order to make over $45 million from the sale of her company.”
Javice reportedly told JPMorgan that Frank had 4.25 million users when, in fact, it had 300,000.
Then Amar, according to the Securities and Exchange Commission, ordered a Frank engineer to generate “synthetic” data to supplement actual data from visitors to Frank’s website.
When the engineer refused the request, Javice hired a New York-based data science professor to create bogus accounts, and Amar negotiated with an external data compiler to procure data on millions of students for $105,000, according to the SEC.
Both Javice and Amar pleaded not guilty to criminal charges and deny any fraudulent activity.
With JPMorgan’s suit on hold, Javice and Amar can’t use tools of civil discovery to defend their criminal prosecution.
“On the other hand, they won’t have to spend time and money defending multiple cases in different jurisdictions, and they won’t risk incriminating themselves or having to waive their Fifth Amendment during discovery in this matter,” Wolson wrote.
Alex Spiro, Javice’s lawyer, and Jacob Kirkham, Amar’s attorney, didn’t respond to Banking Dive’s requests for comment on Wolson’s decision.
A JPMorgan spokesman told Banking Dive via email that the bank has no comment on Wolson’s decision.