JPMorgan Chase Alleges Overbilling By Lawyers in Fraudulent Buyout Case

Published 5 months ago

JPMorgan Chase & Co. has claimed that it is being overbilled by the legal team of Charlie Javice, who is accused of defrauding the bank in a $175 million acquisition of her college-loan-planning site. Javice is represented by three law firms with a total of 77 attorneys, according to a filing in Delaware Chancery Court.

The bank expressed concerns over Alex Spiro, Javice’s lead attorney, charging the bank $2,025 an hour for her defense against both criminal charges and the bank’s lawsuit regarding the deal. Javice’s lawyers have billed JPMorgan a total of $5.4 million, from which the bank rejected $830,000 in fees. The bank argues that Javice is seeking reimbursement for legal work outside the scope of a judge’s order.

In May, Delaware Chancery Court Judge Kathaleen St. J. McCormick ruled that JPMorgan was obligated to cover Javice’s legal costs under the terms of the September 2021 merger agreement through which the bank acquired her company, Frank. This deal led to Javice becoming a managing director and head of student solutions at the bank.

The Fraud Allegations

JPMorgan sued Javice and another Frank executive, Olivier Amar, in December, alleging they had significantly overstated the number of customers at the startup. Manhattan federal prosecutors charged both in April with fraud, accusing them of falsifying information to show the company had 4.25 million customers, while it had fewer than 300,000 in reality. Following these charges, the bank closed down Frank. Both Javice and Amar have pleaded not guilty and could face up to 30 years in prison if convicted.

Dispute over Assets

JPMorgan has suggested that Javice should cover her legal fees with the $21 million she profited from the Frank deal. The bank has also claimed that she attempted to conceal assets by transferring millions previously held at JPMorgan to shell company accounts. On her part, Javice has argued that her assets were seized as part of the criminal case and that her initial transfers from JPMorgan were a result of the bank putting her on administrative leave in September 2022.

The legal battle continues, with both parties exchanging allegations over charges and misconduct.