JPMorgan Chase's fraud lawsuit against Frank founder Charlie Javice over the $175 million sale of her financial-aid website to the bank will be put on hold until she's been tried on criminal charges, a federal judge has ruled.
US District Judge Joshua Wolson in Wilmington, Delaware, said federal prosecutors properly sought to put the bank's suit on ice so Javice couldn't use pre-trial exchanges in that case to bolster her criminal defense. The move doesn't prejudice the rights of Javice or her co-defendant, the judge added.
"Their criminal case is likely to move faster than this civil suit, and vindication there may also neutralize some of the negative publicity about which they complain," Wolson wrote Thursday in a five-page ruling.
Javice and Olivier Amar — another former top executive of the now-defunct Frank website — face conspiracy, wire fraud, bank fraud and securities fraud charges over what the government has called a "brazen plan" to create fake customer accounts to dupe JPMorgan officials about the site's financial vitality.
Alex Spiro, Javice's lawyer, and Jacob Kirkham, Amar's attorney, didn't respond to emails Friday seeking comment on Wolson's decision. Pablo Rodriguez, a JPMorgan spokesman, declined to comment on the ruling. The bank hadn't opposed the government's request.
New York-based JPMorgan sued Javice and Amar in federal court in Delaware in December, accusing them of hiring a data science professor to create fake customer accounts showing Frank had some 4.25 million users, even though they knew it had fewer than 300,000. The pair has pleaded not guilty to the criminal charges and deny engaging in fraud.
In their filings, Javice's and Amar's lawyers said prosecutors were unfairly trying to put pressure on the defendants by letting the criminal case proceed and making it more difficult for them to clear their names of what they said were bogus charges.
Wolson accepted the government's arguments that since both cases involved the same sets of facts, Javice's and Amar's rights wouldn't be prejudiced by allowing the criminal case to take precedence. "The criminal case will likely resolve issues relevant to this case and reduce issues to be resolved here," Wolson said. "It may hasten settlement. And it might obviate the need for this case altogether."
The civil case is JPMorgan Chase Bank v. Javice, 22-cv-01621, US District Court, District of Delaware (Wilmington)
