The US government wants to intervene in JPMorgan Chase & Co’s fraud lawsuit against Frank founder Charlie Javice, asking a federal judge to halt pre-trial information exchanges until she has been tried on criminal charges.
(Bloomberg) — The US government wants to intervene in JPMorgan Chase & Co’s fraud lawsuit against Frank founder Charlie Javice, asking a federal judge to halt pre-trial information exchanges until she has been tried on criminal charges.
Prosecutors have asked US District Judge Joshua Wolson to put the discovery process for the separate lawsuit in Delaware on hold so Javice can’t use it to gather information that would help bolster her criminal defense. The government charged her with defrauding JPMorgan in its $175 million acquisition of her college financial-planning site.
Javice and Olivier Amar — another ex-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.
“A stay of discovery is appropriate because any exchange of discovery in the civil case would be asymmetrical and would allow the defendants to circumvent the criminal discovery rules and improperly tailor their defenses,” the government said in a court filing Tuesday. “Here, the record makes plain that Javice is seeking civil discovery for use in her criminal trial.”
Prosecutors said in court filings JPMorgan didn’t oppose or support its call for a discovery delay. The bank declined to comment.
Javice’s lawyer, Alex Spiro, said the defense team opposed the government’s request. “If they are in the truth-seeking business, I don’t understand why they want to block the discovery from coming out,” Spiro said in an emailed statement. A lawyer for Amar didn’t immediately return an email seeking comment.
New York-based JPMorgan sued Javice and Omar 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 have pleaded not guilty to the criminal charges and deny engaging in fraud.
Since both cases focus on the same set of facts, prosecutors say a delay in pre-trial information exchanges in the civil case won’t hurt Javice’s and Omar’s rights. “Issues common to both cases can be resolved in the criminal proceeding, thereby simplifying the civil action,” the government said.
Prosecutors also are worried the government’s interests in the civil case aren’t “protected adequately by the existing parties,” and that also warrants a delay in the case, according to the filing.
The civil case is JPMorgan Chase Bank v. Javice, 22-cv-01621, US District Court, District of Delaware (Wilmington)
(Updates with comment in fifth paragraph.)
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