JPMorgan Chase is aggressively contesting a court order requiring it to cover the $142 million in legal fees racked up by Charlie Javice and Olivier Amar, the founder and chief marketing officer of the now-defunct financial aid startup Frank. The bank acquired Frank for $175 million in 2021, only to later discover that the company’s customer numbers had been drastically inflated through fraudulent practices.
Both Javice and Amar were convicted earlier this year for defrauding JPMorgan. Javice received a seven-year prison sentence. Despite the convictions, a judge initially ruled that JPMorgan must cover their legal costs. The bank is now seeking to overturn this decision, arguing the legal bills are excessive and unjustified.
The dispute centers on the nature of the expenses claimed by Javice’s legal team. JPMorgan alleges that the billing included exorbitant and questionable charges, such as luxury hotel upgrades, billing for 24-hour workdays, and even purchases of cellulite butter—a high-end moisturizer. Michael Pittinger, JPMorgan’s lawyer, described the case as unprecedented in its “extreme abuses.”
Javice’s spokesperson countered that all expenses were incurred in compliance with JPMorgan’s internal policies. According to the spokesperson, Javice “didn’t charge or see any expenses” and only purchased items like ice cream in line with the bank’s code of conduct. The claim is that Javice never sought reimbursement for anything explicitly prohibited under the guidelines provided by JPMorgan.
The core issue is whether JPMorgan bears responsibility for the legal defense of individuals convicted of defrauding the bank. The case highlights the risks of acquiring fast-growing startups without rigorous due diligence. It also raises questions about the extent to which large corporations are liable for the actions of their acquired entities, even when those actions involve criminal misconduct. JPMorgan’s attempt to overturn the judge’s order will likely set a precedent for similar cases, determining whether companies can be forced to fund the legal defense of executives found guilty of fraud.
The outcome of this dispute will shape how financial institutions approach acquisitions and manage legal liability in the future. It underscores the importance of thorough vetting processes and clear contractual agreements to protect against fraudulent behavior and excessive legal costs
