JPMorgan Challenges $74 Million Legal Fee Claim from Convected FinTech Founder

JPMorgan Chase is contesting a $73.9 million legal fee claim from Charlie Javice, the founder of student financial aid platform Frank who was convicted of fraud for misleading the bank during its $175 million acquisition. The dispute centers on whether indemnification clauses in the acquisition agreement require the bank to cover the mounting legal costs of Javice's defense, which include luxury hotel upgrades, expensive meals, and billing for days when court was not in session.

Background and Context

The controversy stems from JPMorgan's 2021 acquisition of Frank, a fintech startup designed to simplify the student financial aid process. Following the purchase, the bank discovered that Javice had allegedly fabricated a database containing millions of fake customers to inflate the company's valuation and justify the $175 million price tag. Prosecutors described this as a deliberate scheme to defraud, leading to Javice's arrest in April 2023 on charges including conspiracy, wire fraud, and bank fraud. Alongside criminal charges from Manhattan federal prosecutors, Javice also faced separate fraud allegations from the Securities and Exchange Commission.

Key Figures and Entities

Charlie Javice, once celebrated as a rising star in fintech, was convicted in March 2025 and subsequently sentenced to seven years in prison in September 2025. The court also ordered her to pay $22.36 million in forfeiture and $287 million in restitution to JPMorgan. Despite her conviction, Javice counter-sued JPMorgan in 2023, arguing that the acquisition made her an employee of the bank, which therefore should cover her legal defense costs. In May 2023, a court ruled that JPMorgan was indeed required to advance her legal fees, though the extent of this obligation remains fiercely contested.

Legal and Financial Mechanisms

According to previously sealed Delaware court filings, Javice's legal team has billed millions for attorneys and staff to attend her fraud trial, including on non-court days. The expenses also included luxury hotel room upgrades, meals costing $900 and $710, and alcohol purchases—all charged to JPMorgan under the advancement order. JPMorgan is now asking the court to block $10.2 million in disputed charges and to relieve it of any obligation to cover additional legal expenses going forward. The bank's filing characterizes Javice's advancement demands as "bloated" and reflecting "clear abuse" of the indemnification provisions.

International Implications and Policy Response

This high-profile dispute highlights the potential risks and unexpected costs embedded in merger and acquisition agreements, particularly in the fast-moving fintech sector. For financial institutions acquiring innovative startups, this case serves as a cautionary tale about how indemnification clauses can create significant post-acquisition liabilities. The court's forthcoming decision could establish important precedents regarding the scope of advancement rights in corporate acquisitions, potentially reshaping how these provisions are negotiated in future fintech deals. The outcome may influence how banks structure risk allocation when acquiring growth-stage companies with less-established compliance frameworks.

Sources

This report is based on Delaware court filings, public records of the criminal proceedings, and court documents related to JPMorgan's acquisition of Frank. Information also draws from the original criminal indictment and SEC filings from 2023, as well as sentencing documents from September 2025.