A lawyer representing Charlie Javice accused the US government of deploying “hide-the-ball” legal tactics in an effort to gain an advantage in its criminal prosecution of the Frank founder.
Javice is simultaneously fighting fraud cases brought by JPMorgan Chase & Co., federal prosecutors and the US Securities and Exchange Commission alleging she falsified data to vastly inflate the number of Frank users during negotiations over the bank’s $175 million acquisition of her college loan planning site.
Her lawyer on Wednesday accused the government of gamesmanship, saying the Justice Department has strategically asked the court to pause the SEC’s civil suit to allow the criminal case to advance first.
The move is “designed to gain advantage in the criminal action,” attorney Alex Spiro argued in a court filing. It enables the SEC and prosecutors to “play hide-the-ball with Ms. Javice as she fights for her liberty and livelihood,” and deprives her of a level playing field to “timely defend herself” in both cases, he said.
While the SEC has said it takes no position on the pause request, the agency has asked the court to give it more time to turn over documents Javice asked for that she claims are critical to her defense, Spiro said in the filing. He urged the court not to allow the SEC case to be put on hold.
The US Attorney’s Office in Manhattan didn’t respond to a phone call seeking comment on the filing.
The SEC said in a letter to the court on Thursday that Javice’s contention that it is attempting to hide exculpatory evidence is “meritless.” The regulator said it wouldn’t be appropriate for it to respond to civil discovery requests while the bid to pause the case is pending.
“In any event, the Commission has undertaken to produce to the USAO, pursuant to its access request, all documents in the Commission’s possession provided by third parties during the Commission’s investigation as to Javice, with the understanding that the USAO may produce these documents to Javice to the extent required in the parallel criminal case,” the SEC said in a filing. “Accordingly, Javice’s assertion that the Commission is ‘colluding to deprive Ms. Javice of access’ to documents produced by third parties is baseless.”
JPMorgan sued Javice and another Frank executive, Olivier Amar, in December, alleging they used fake customer accounts to exaggerate the number of people using the Frank site in a scheme to dupe the bank. She allegedly engaged an outside data scientist to create fake user data when Frank’s own engineering director refused to do it.
Lawyers for Javice have called the suit “nothing but a cover” and said JPMorgan was just trying to “retrade the deal.” She is also countersuing JPMorgan.
She faces criminal charges including conspiracy, wire fraud affecting a financial institution and bank fraud. Javice has pleaded not guilty and is free on $2 million bond.
The case is US v. Javice, 23-cr-251, US District Court, Southern District of New York (Manhattan).
