Charlie Javice, a convicted startup founder, is embroiled in a legal dispute with JPMorgan Chase & Co. regarding allegations of fraudulent billing for personal expenses. This controversy arises as part of a $74 million legal claim against her, following her conviction for defrauding the bank during the acquisition of her fintech startup, Frank.
Reports indicate that Javice allegedly charged JPMorgan for various personal items, including cellulite butter and luxury hotel upgrades. To date, the bank has incurred over $142 million in legal fees associated with defending against federal fraud charges leveled against both Javice and her co-executive, Olivier Amar. In light of these growing expenses, JPMorgan is working to revise a judge’s order that permits further legal fees.
Michael Pittinger, an attorney representing JPMorgan, characterized the situation as one marked by “extreme abuses” during proceedings in Delaware, according to the Wall Street Journal. In response to the allegations, a spokesperson for Javice, Juda Engelmayer, has denied that Javice is responsible for the alleged expenditures. Engelmayer contends that these charges were submitted by Javice’s legal team, which is accused of inaccurately inflating their billing hours to an impossible extent.
Javice was convicted on four counts of fraud in March, resulting in a sentence of over seven years in prison. Despite her conviction, she continues to submit invoices to JPMorgan for legal expenses related to her ongoing appeal. The original acquisition of Frank by JPMorgan for $175 million in 2021 has since become contentious, since it has been revealed that the startup’s valuation was based on fabricated subscription figures.
Pablo Rodriguez, a spokesperson for JPMorgan, reiterated the bank’s stance, asserting that the legal fees being requested by Javice and Amar are “patently excessive and egregious.” This situation underlines the risks associated with corporate acquisitions, particularly as JPMorgan’s purchase of Frank has turned problematic with revelations of deceitful business practices.
The ongoing legal battle and the financial implications serve to highlight the broader challenges corporations face in navigating due diligence processes during acquisitions. The outcome of Javice’s case could potentially shape future strategies in corporate acquisitions and influence how companies assess the legitimacy of startup valuations.
