The multi-million-dollar fraud trial between young entrepreneur Charlie Javice and banking giant JPMorgan Chase (JPM) is set to begin tomorrow.
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Argument Over Student Figures
Javice, 31, is facing criminal charges related to the $175 million sale of her finance company Frank – which helped students applying for financial aid – to JPMorgan in 2021 just four years after she set up the business. After the deal Javice took on the role of JPM’s head of student solutions with a wage of $300,000 per year and a reported $21 million in stock proceeds and a $20 million retention bonus.
However, JPM claims that the Frank user database was found to contain data on only 300,000 people rather than the 4.25 million customers claimed by Javice. The suggestion is that Javice and her co-defendant Olivier Amar, Frank’s former chief growth officer paid a data scientist to manufacture the figures. JPM filed criminal charges against Javice stating that she had “fraudulently induced” the bank to buy her business.
Reputational Damage
As reported in the Financial Times Javice’s defence team is set to claim that JPM is feeling “buyer’s remorse” and exploited the government to turn a commercial dispute into a criminal case. “The government worked intimately with JPMC, despite the bank’s reputational stake in the outcome of the case as the acquirer,” her team has alleged in a recent court filing. According to the Financial Times Javice’s defence may hinge on what exactly defined the “signing up” of a student.
Although not financially damaging for a bank with a market value of $778 billion the dispute has been a blow to JPM’s reputation. Its chief executive Jamie Dimon has labelled the move “a big mistake.” It calls into question JPMorgan’s due diligence expertise and on a wider level how banks, asset managers and corporates can get carried away by the allure of charismatic entrepreneurs like Javice, and before her Sam Bankman-Fried and Elizabeth Holmes, amidst the excitement of technological innovation.
Is JPM a Good Stock to Buy?
On TipRanks, JPM has a Moderate Buy consensus based on 12 Buy and 7 Hold ratings. Its highest price target is $330. JPM stock’s consensus price target is $275.60 implying an 0.36% downside.
