Frank founder accused of defrauding JPMorgan says government planning request puts her at a disadvantage

Financial aid startup founder accused of defrauding JPMorgan Chase in its $175 million acquisition of her company says federal government efforts to stay a civil lawsuit against her would give prosecutors an advantage on her in their criminal case.

Charlie Javice, who was once on the Forbes “30 under 30” list with his now-closed company Frank, was charged last month with federal fraud charges. She also faces multiple lawsuits from the Securities and Exchange Commission and JPMorgan Chase.

She is accused of grossly inflating Frank’s client count to “fraudulently induce” the bank to take over the business in 2021.

The Justice Department said Javice fabricated Frank’s user data to make it look like the startup had 4.25 million student customers. There were fewer than 300,000, officials said.

She denied wrongdoing.

On Wednesday, Javice’s attorney, Alex Spiro, opposed the government’s request to suspend the SEC’s civil lawsuit, which would allow Javice to be tried first in the criminal case, according to court documents. .

“The government is making no effort to conceal the fact that its request is expressly designed to gain an advantage in the criminal prosecution,” Spiro said, adding that the move “would allow the SEC and the government to play hide and seek. with Ms. Javice as she fights for her freedom and livelihood.

“This is nothing less than a coordinated government effort to deprive Ms. Javice of exculpatory evidence essential to her defense and necessary to exonerate her,” he wrote in his filing.

But the government said its request was ‘appropriate’ because ‘any exchange of discovery in the SEC case would be asymmetrical and allow defendants to circumvent criminal discovery rules and inappropriately tailor their defenses in the criminal case. “, according to a court in May. deposit.

“If the discovery in the SEC case proceeds, there would be a risk of significant interference with the criminal case,” the Justice Department said, adding that the stay in the civil case would also “preserve” the resources of the court because “many problems presented by the civil action will be resolved in the criminal case.

The SEC said it takes no position on the government’s efforts, according to court documents.

Last year, JPMorgan sued Javice in federal court in Delaware for alleged fraud, accusing him of lying about Frank’s size and success to “cash in”, according to the lawsuit.

The bank learned of the discrepancy when it sent out a campaign email to a list of people Javice called clients, but got few responses, according to the SEC complaint.

Javice denied the bank’s accusations and filed a counterclaim, saying the bank “cannot prove its outlandish allegations” and “has compromised its reputation”.

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