Judge Rules JPMorgan Still Has to Pay for Charlie Javice’s Legal Defense

JPMorgan Chase must keep paying the legal fees of convicted fraudster Charlie Javice, a Delaware judge ruled on Thursday, per a Wall Street Journal report of 2 July.

The ruling came after the bank accused Javice — who was convicted last year of defrauding JPMorgan — of accumulating “astronomical” legal fees, including expenses such as $530 for gummy bears, per the Journal's account. Javice, the founder of the student-finance startup Frank, faces seven years in prison.

Another judge this week denied a request to remove her ankle monitor while her case is on appeal, per the same report. The ruling was corroborated by Business Insider and by Investing.com, which reported that the Delaware judge held JPMorgan cannot stop paying Javice's legal bills.

Background

Javice founded Frank, a platform that helped students navigate financial aid, and sold it to JPMorgan in 2021 for $175m. The bank later alleged the startup's customer base had been fabricated at scale, and Javice was convicted of defrauding the bank in the acquisition — one of the most prominent startup-fraud prosecutions since the Theranos case, and an enduring embarrassment for a bank that had held the deal up as a fintech coup.

The fee fight turns on Delaware corporate law, under which companies routinely obligate themselves — through charters, bylaws or merger agreements — to advance legal costs for their officers when they are sued or prosecuted over conduct in their corporate roles. Advancement disputes are heard in Delaware's Court of Chancery, and the obligation is distinct from ultimate indemnification: a company may be required to fund a defence as the case proceeds even where it may later seek to recover the money. Delaware courts have repeatedly enforced advancement even for executives accused, or convicted, of defrauding the very company paying the bills — the position JPMorgan finds itself in.

What comes next

Javice's appeal of her conviction is pending, and advancement obligations of this kind typically run until the proceedings they cover are exhausted — meaning JPMorgan's payments, and its ability to contest specific charges as excessive, will likely track the appeal's course. Watch the appeal itself, any further challenges by the bank to individual billed expenses, and the separate conditions of her release, including the ankle-monitor ruling.