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

The founder of a financial aid startup accused of defrauding JPMorgan Chase in its $175 million acquisition of her company says the federal government’s efforts to stay a civil lawsuit against her gives prosecutors an advantage over their criminal case would give her.

Charlie Javice, who once made the Forbes 30 Under 30 list with her now-defunct company Frank, was indicted last month on federal fraud charges. She also faces multiple lawsuits from the Securities and Exchange Commission and JPMorgan Chase.

She is accused of having massively increased the number of Frank customers in order to tempt the bank “with fraudulent intent” to buy the company in 2021.

The Justice Department said Javice forged Frank’s user credentials to make it appear the startup had 4.25 million student customers. There were fewer than 300,000, officials say.

She has denied wrongdoing.

On Wednesday, Javice’s attorney, Alex Spiro, objected to the government’s request to stay the SEC’s civil action, which court documents said would allow Javice to go on trial first in the criminal case.

“The government makes no attempt to hide the fact that its request is specifically aimed at gaining an advantage in law enforcement,” Spiro said, adding that the move “would allow the SEC and the government to work with Ms Javice playing hide-and-seek while she fights for her freedom and her livelihood.”

“This is nothing short of a coordinated government action to withdraw exculpatory evidence that is critical to Ms. Javice’s defense and necessary to exonerate her,” he wrote in his filing.

However, the government stated that its request was “reasonable” because “any exchange of evidence in the SEC case would be asymmetric and would allow defendants to circumvent crime investigation rules and improperly adjust their defenses in criminal proceedings.” such a court filing in May.

“If investigations into the SEC case continued, there would be a risk of significantly damaging the criminal process,” the Justice Department said, adding that the stay of the civil trial would also “conserve” the court’s resources because “many of the issues…” The Cases submitted through the civil action will be resolved in the criminal proceedings.”

The SEC said it had no position on the government’s efforts, court documents show.

Last year, JPMorgan sued Javice in federal court in Delaware for fraud, accusing her of lying about Frank’s size and success to “make money,” the lawsuit says.

The bank learned of the discrepancy when it sent out an email campaign to a list of people Javice said were customers, but received few responses, the SEC complaint says.

Javice has denied the bank’s allegations and has filed a countersuit. She said the bank “cannot prove its outlandish claims” and has “put its reputation at risk”.

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