(Bloomberg) — JPMorgan Chase must pay Frank founder Charlie Javice’s defense costs in his lawsuit that accuses him of defrauding the bank in the $175 million acquisition of his college loan planning site.
Delaware Chancery Court Judge Kathaleen St. J. McCormick concluded Monday that JPMorgan was legally obligated to cover Javice’s legal bills, rejecting the bank’s argument that its alleged fraud was outside the scope of the settlement agreement. merger of 2021. The ruling is also likely to cover Javice’s legal fees tied to criminal fraud charges brought by federal prosecutors over the disputed deal.
JPMorgan sued Javice and Olivier Amar, another Frank executive, for fraud in Delaware federal court in December, alleging they falsified records to show the site had more than four million customers when in fact it had less than a tenth of them. that number. JPMorgan has since shut down Frank’s site.
Javice and Amar turned around and sued JPMorgan for legal fees in Delaware Chancery Court, saying they deserved coverage under the bank’s policies since they became JPMorgan employees after the buyout. The bank’s lawyers responded to the fraud allegations and denied the institution’s indemnification obligations.
Javice was charged with fraud by federal prosecutors in Manhattan last month. He was also sued by the Securities and Exchange Commission. He has yet to plead guilty in the criminal case, and his lawyers and prosecutors asked last week for the case to be delayed for talks between the two parties.
McCormick also ordered JPMorgan to cover Amar’s legal fees for the same reasons the bank is pending Javice’s bills. Amar, Frank’s head of acquisitions and growth, was not named in either the criminal case or the SEC case.
The bank urged McCormick to reject requests for legal fees from Javice and Amar, saying they had obtained millions of dollars from the sale of Frank that they could use to cover their own defense costs.