JPMorgan Chase faces a $74 million invoice for defending the executive it accuses of defrauding it in a $175 million startup acquisition. The sprawling bill, detailed across dozens of pages, covers first-class flights, luxury hotels, catered meals, and even a $13.57 Spotify subscription, as court orders compel payment amid ongoing appeals.
A Deal Gone Sour
In 2021, JPMorgan acquired Frank, a startup founded by Charlie Javice that promised to streamline federal student aid applications and unlock millions of young banking customers. The $175 million purchase appeared as a savvy entry into fintech, targeting a vast user base of college students navigating FAFSA forms. Yet hidden contract terms would later bind the bank to extraordinary expenses when the deal unraveled.
Frank’s Rapid Ascent
Javice launched Frank in 2017, positioning it as a paid service to simplify financial aid paperwork for students. The platform drew venture funding, media attention, and Javice’s inclusion on Forbes’ 30 Under 30 list. By acquisition time, Frank touted nationwide reach and explosive growth, with claims of over 4 million users that enticed JPMorgan’s interest.
The Fabricated Metrics
Post-acquisition, JPMorgan discovered the user figures were inflated. Prosecutors revealed Frank had fewer than 300,000 actual users; Javice had spent $18,000 to buy fake data from a single source to fabricate the rest. The bank gained only 10 new customers from the deal, prompting federal scrutiny and exposing the gap as central to fraud allegations.
Fraud Trial and Conviction
Federal charges of bank fraud, wire fraud, and conspiracy targeted Javice and executive Olivier Amar. Prosecutors labeled Frank a “crime scene” of manufactured metrics. The New York federal court trial lasted five weeks, with JPMorgan positioned as victim—and unwilling financier—due to acquisition terms. In March 2025, a jury convicted Javice on multiple counts. Judge Alvin Hellerstein sentenced her to over seven years in prison in September 2025, describing the fake numbers as “biblical.” She remains free on $2 million bail during appeals, with minimal restitution expected at 10% of future income.
The Indemnification Burden
A key clause in Frank’s acquisition agreement mandated JPMorgan advance legal fees for executives linked to the deal, without excluding fraud. Delaware courts upheld this in 2023, ruling the bank must pay upfront regardless of guilt. Javice’s defense mobilized 147 professionals from five firms, including high-profile attorneys Alex Spiro at $3,000 hourly and Jose Baez. By trial’s end, costs hit $74 million—42% of the purchase price—with Quinn Emanuel receiving $43 million and Baez’s firm about $14 million. Appeals added $13 million more, surpassing Elizabeth Holmes’ $30 million Theranos defense.
Extravagant Expenses Spark Outrage
Invoices itemized luxuries: $530 for gummy bears, $347 charcuterie boards, a $161 seafood tower, $710 at Eataly, over $3,000 first-class flights, and $25,800 hotel upgrades. JPMorgan spokesman Pablo Rodriguez deemed them “patently excessive and egregious,” blaming a blank-check setup. The bank paid most but contests $10.2 million and seeks court intervention to halt further outlays. Despite extensive due diligence involving hundreds of employees, no independent user audit occurred, drawing judicial criticism though fault lay primarily with Javice’s deception.
Shareholder Fallout and Broader Lessons
Total losses near $249 million, borne by shareholders, fueling comparisons to Theranos and FTX scandals. Critics question big-bank rush into unverified fintech. Experts now stress fraud carve-outs, data audits, and escrow in contracts. Under Delaware law, such advancement clauses prove hard to escape. As appeals proceed and fees mount, the Frank case serves as Wall Street’s costly reminder: fine print can turn victims into payers, prompting closer scrutiny in tech mergers.
Sources:
U.S. Department of Justice, Southern District of New York – “Startup CEO Charlie Javice Sentenced To 85 Months In Prison For $175 Million Fraud” – September 28, 2025
U.S. Securities and Exchange Commission – “SEC Charges Founder of Frank with Fraud in Connection with JPMorgan’s $175 Million Acquisition” – April 3, 2023
Delaware Court of Chancery – “JPMorgan Chase Bank, N.A. v. Javice” (Case No. 2022-1179-KSJM) – May 8, 2023
Delaware Court of Chancery – Court Filing – “JPMorgan’s Objection to Fee Applications” (Bloomberg Law Documents) – December 30, 2025
JPMorgan Chase & Co. – “JPMorgan Chase Acquires Frank, the Leading College Financial Planning Platform” – September 21, 2021
U.S. District Court, Southern District of New York – “United States v. Charlie Javice – Trial Verdict and Sentencing” – March 28, 2025 (Conviction) / September 29, 2025 (Sentencing)