Charlie Javice’s team seeks mistrial in JPMorgan fraud case

Charlie Javice’s lawyers filed a motion for the judge to declare a mistrial in the fraud case against the former Forbes’ “30 Under 30” entrepreneur. She is on trial for allegedly defrauding JPMorgan Chase in the lead-up to the bank acquiring her student aid startup, Frank, for $175 million in July 2021.

Javice’s lawyers stated her right to a fair trial had been “irreparably compromised” when the judge shortened the defense’s opening statement.

Her counsel in a motion filed Friday argued Javice’s Fifth and Sixth Amendment rights — the right to a fair trial and the right to effective assistance of counsel — were violated by the decision.

“Opening statement was Ms. Javice’s only opportunity to preview her theory of defense and to contextualize the allegations against her before the government commences its lengthy and complicated presentation of evidence,” the lawyers wrote in the motion.

“The opening statement’s importance to a criminal defendant is not merely academic,” the motion continues, citing Rudin v. Myles: “[T]he impression a juror has after opening statements usually carries with him or her to become the verdict in the case.”

Prosecutors allege Javice and co-defendant Olivier Amar, former Frank chief growth officer, fabricated customer data to falsely inflate Frank’s value prior to the sale, reporting the startup had 4.2 million customers when the actual number was closer to 300,000. She faces counts of securities fraud, wire fraud, bank fraud and conspiracy.

The motion also alleges that the court misstated jury instructions regarding the wire and bank fraud counts. The jury was informed at the start of the trial that the government needed to prove beyond a reasonable doubt that Javice deliberately made false and misleading statements with the intention to deceive, according to her defense.

Her lawyers in the motion argue the court failed to clarify the higher legal standard the case has, requiring the prosecution to prove the false statements led to material misrepresentations.

“The error is twofold,” the motion states. “First, the Court impermissibly eroded the government’s burden to prove guilt beyond a reasonable doubt in violation of the Due Process Clause of the Fifth Amendment. Secondly, the Court invited constructive amendment of the indictment in violation of the Grand Jury Clause of the Fifth Amendment. This is a per se violation of Ms. Javice’s Fifth Amendment rights. United States v. LaSpina … Justice demands a mistrial.”

Founded in 2017, Frank was a fintech company that aimed to alleviate the financial aid process for college students. The now 32-year-old launched the startup after graduating from the University of Pennsylvania’s Wharton School of Business. If convicted, Javice could face several years in prison.

Lead prosecutor Rushmi Bhaskaran argued Javice worked with a friend to acquire fake names and addresses to bolster the company’s numbers in order to pass the JPMorgan due diligence requirements. Bhaskaran also alleged Javice’s co-defendant Amar purchased fabricated student data from third parties to further boost the standings.

“It was through their lies that they became multimillionaires,” Bhaskaran said in the prosecution’s opening statement.

The sham was uncovered after the deal was finalized when JPMorgan began to market offerings to Frank’s customer base and received far fewer responses than expected. The bank claims 70% of the marketing emails it sent to Frank’s alleged customers bounced.

Javice’s lawyers refute the allegations and say the bank was aware of the actual numbers before completing the deal. The lawsuit is “nothing more than buyer’s remorse,” her attorney Jose Baez said in his opening statement, adding that JPMorgan only changed its mind about the deal after financial aid regulations changed a year after the acquisition.

Frank had received flack even before the JPMorgan acquisition, when, in 2017, the United States Department of Education accused the company of misleading customers to believe it was associated with the department due to its original URL of frankfafsa.com. As part of the 2018 settlement, the website dropped FAFSA (Free Application for Federal Student Aid) from its address.