The founder of a financial aid start up , accused of defrauding JPMorgan Chase when it acquired her company for $175 million, says that the federal government’s efforts to stop a civil suit against her will give prosecutors a significant advantage in their criminal case.
Charlie Javice was arrested last month on federal fraud charges. She had previously been listed in Forbes’ “30 Under 30”, but her company Frank has since closed. She is also facing multiple lawsuits by the Securities and Exchange Commission and JPMorgan Chase.
She is accused of “fraudulently” inducing the bank to purchase the company by 2021.
The Justice Department stated that Javice faked Frank’s data in order to give the impression that the startup had 4,25 million students as customers. Officials claim that it had less than 300,000.
She denies any wrongdoing.
According to court documents, Alex Spiro, Javice’s attorney, objected on Wednesday to the government’s request to pause SEC’s civil case. This would have allowed Javice to first be tried in the criminal trial.
Spiro stated that the Government made no attempt to hide the fact that the application was designed to gain an advantage in the criminal case. He added that the move would allow the SEC and Government to “play hide-the ball with Ms. Javice as she fights to protect her freedom and livelihood.”
In his filing, he stated that “this is nothing less than an organized government effort to deny Ms. Javice of exculpatory proof critical to her defence and necessary to exonerate” her.
According to a court filing in May, the government argued that its request was “appropriate,” because “any exchange in discovery in the SEC Case will be asymmetrical” and “would allow defendants to circumvent criminal discovery rules in order to improperly tailor their defences in the Criminal Case.”
The Justice Department stated that if discovery were to continue in the SEC Case, it would “risk significant interference” with the Criminal Case. It added that pausing civil proceedings would “preserve resources” for the court because “many issues raised by the civil action would be resolved in Criminal Case.”
Court documents reveal that the SEC has stated it does not take a stance on government efforts.
According to the lawsuit, JPMorgan filed a suit against Javice last year in Delaware federal courts over an alleged fraud. They accused her of lying to “cash out” on Frank’s success and size.
The SEC complaint stated that the bank discovered the discrepancy after sending an email campaign to people Javice claimed were customers. However, only a small number of responses came in.
Javice denied the bank’s accusations, and filed a counterclaim. She claimed that the bank “cannot prove their outlandish allegations” and had “compromised [her] reputation.”
