Maybe they should try her first pet’s name? High school mascot?
For months, JPMorgan Chase has been embroiled in a very high-profile lawsuit against Charlie Javice, whom the bank sued for fraud after acquiring her student loan startup Frank. Now, in an April 28 brief filed in Delaware District Court, JPMorgan Chase is seeking to conduct early limited discovery and to have Javice to hand over any passwords to JPMorgan Chase applications she may have and explain why she moved the funds she received from the sale of Frank to entities that aren’t in her name. The bank also continued to argue that Javice’s employment counterclaims should be moved to arbitration.
At issue is Javice’s depositing of funds into three Nevada entities last year. JPMorgan Chase closed its buy of Frank, a financial aid startup, in September 2021. The transaction called for Javice to receive about $28 million cash for her interests in the startup, according to an April 21 Javice court filing. The entrepreneur deposited about $21.4 million into three accounts, including two trusts, at JPMorgan. A third trust was set up to receive the remainder, about $7.3 million, which JPMorgan retained, according to Javice court filing.
Javice placed several millions of dollars into a Certificate of Deposit on Sept. 13, JPMorgan said in an April 7 brief. That evening, JPMorgan Chase notified Javice she was on administrative leave. On Sept. 21, Javice’s accountant, S. Adelsberg & Co, created Chariot Holdings 1, Chariot Holdings II and Chariot Holdings X—which held her Signature Bank accounts. Two days later Javice cashed out her CD, forgoing the thousands of dollars in interest, and transferred the money to the Chariot X shell, the brief said.
JPMorgan has previously said that Javice’s use of a Nevada shell company is a “particular concern,” according to the April 7 brief. The state is a popular jurisdiction for individuals seeking to hide ownership information and evade tax obligations, the bank said in the brief. On March 10, when Silicon Valley Bank collapsed and Signature was feared to be next, Javice moved the funds to unnamed “major domestic institutions,” according to legal documents.
Javice said that she moved the money out of JPMorgan Chase because “she no longer wanted to bank with an entity that was retaliating against her and baselessly accusing her of severe misdeeds,” according to her April 21 answering brief. (JPMorgan Chase and Javice could not be reached for comment.)
JPMorgan Chase also pointed to Javice’s arrest by the Department of Justice on April 3. Four days later, on April 7, federal prosecutors seized and blocked Javice’s access to her accounts. The entrepreneur has claimed that this makes any discovery by JPMorgan Chase moot, according to her court filings. JPMorgan Chase disagreed, arguing that the fund transfers happened about one month before Javice was arrested. Even if her accounts are frozen, it doesn’t mean they’re not necessary to preserve evidence of Signature transfers or Chariot’s role in moving or holding merger proceeds, JPMorgan said in the April 28 brief. More importantly, Javice didn’t disclose whether Chariot’s assets or accounts were also frozen, JPMorgan Chase said in its brief.
When she was terminated in November 2022, JPMorgan Chase instructed Javice to return all bank property including intangibles like passwords, according to a Feb. 14 letter to Javice's attorney Alex Spiro. Javice has refused to turn over passwords for Frank systems and applications, which the bank called its property, an April 7 brief said. This means Javice can access JPMorgan Chase property, despite no longer being an employee, creating a risk that she has or will access records outside the discovery process. This could lead to potential “spoliate metadata,” the intentional or negligent altering, hiding or destruction of Metadata, the April 7 brief said.
Javice has claimed that she doesn’t have "any means of accessing JPMorgan Chase property” but has failed to confirm that she didn’t use passwords to access JPM property during her administrative leave or after she was terminated, the April 28 brief said. The entrepreneur has said she doesn’t have “administrative passwords” but didn’t define the term or confirm that she doesn’t have non-administrative passwords.
For example, JPMorgan Chase said it can’t access Frank’s Dropbox account because it doesn’t have the username and password to reset the account, according to a March 16 letter to Spiro. The Dropbox account is still controlled by Javice, the March 16 letter said. (The bank also complained about Javice’s Twitter account, which she deactivated, risking destruction of relevant evidence. Javice has since restored the account, the letter said.)
“Despite pre-motion correspondence, a pre-motion meet and confer, and her Answering Brief filed with the Court, it remains entirely unclear whether Javice possesses JPMC property in the form of passwords. As such, discovery into this topic is entirely appropriate,” JPMorgan Chase said.
In a second brief, JPMorgan Chase continued to argue that Javice’s employment counterclaims should be moved to arbitration. Javice claims that JPMorgan Chase terminated her employment at Frank without cause and should be required to pay her legal fees, costs, and expenses, according to her December claim against the bank. The entrepreneur has been waiting for weeks to learn if the bank will be forced to pay and is apparently running low on funds as she continues to fight multiple lawsuits against her. On March 8, Kathaleen St. Jude McCormick, the Delaware Chancery Court judge overseeing the case, heard oral arguments from both sides, but she has yet to return a verdict.
