JPMorgan Chase is fighting to avoid footing the skyrocketing legal bills of Charlie Javice, founder of student financial-aid startup Frank, and former executive Olivier Amar. The bank is challenging a court order that requires it to advance their defense costs — bills that have ballooned to an astonishing $142 million. The dispute highlights just how expensive white-collar defense battles can become.
The tension stems from JPMorgan’s $175 million acquisition of Frank and the ensuing allegations that Javice and Amar inflated user numbers to close the deal. After a jury convicted Javice of fraud and sentenced her to seven years in prison, the question dominating the courtroom is no longer about the alleged deception itself, but about who must cover her defense — and on what terms.
JPMorgan Calls Out “Extravagant” Expenses
According to court filings cited by The Wall Street Journal, JPMorgan’s lawyers have accused Javice’s legal team of submitting unreasonable expenses, including luxury hotel stays, around-the-clock billing, and even personal care items. The bank argues these charges fall far outside any fair interpretation of its corporate policy — and should not be covered under indemnification or employment agreements linked to the Frank acquisition.
Javice’s representatives have pushed back, saying she complied with JPMorgan’s rules, did not approve costs personally, and never sought reimbursement beyond the bank’s policy limits. That distinction matters because most corporate advancement agreements allow reimbursement only for “reasonable and necessary” legal expenses — a subjective standard that often becomes contentious in large-scale litigation involving criminal, regulatory, and civil cases simultaneously.
The $142 million tally is striking, equating to roughly 81 percent of the price JPMorgan originally paid for Frank. In high-stakes white-collar cases, however, such figures are not unheard of. The nation’s top defense firms command four-figure hourly rates, and parallel legal fronts — criminal trials, SEC actions, and shareholder suits — can drive costs up rapidly.
The Legal Fine Print: Advancement vs. Indemnification
At the heart of the fight lies a technical but crucial distinction: advancement versus indemnification. Under Delaware corporate law (Section 145), companies must often advance legal fees for officers and employees while litigation is pending. Recipients may later have to repay those amounts if found to have acted in bad faith or engaged in fraud. Courts typically enforce these advancement obligations strictly, so long as contracts or bylaws commit the company to cover such costs until the case’s final resolution.
JPMorgan appears to argue two things: first, that alleged fraud involving the acquisition negates any obligation to advance funds; and second, that many submitted invoices are so excessive they would be disallowed even if advancement applied. This puts the spotlight on the acquisition’s contracts — particularly clauses defining covered individuals, fraud exceptions, and expense limitations.
Why the Case Matters for Startup Deals
Beyond the headline drama, the outcome could reshape how corporate buyers and startup founders negotiate risk in mergers and acquisitions. With regulators increasingly scrutinizing inflated growth metrics and other misconduct during startup sales, acquirers are tightening indemnification clauses, reimbursement caps, and holdback structures.
The Frank case serves as a stark reminder: founders and executives must pay as much attention to advancement and indemnification terms as they do to company valuations. Once investigations begin, legal teams mobilize quickly — and even mundane expenses like travel or lodging can later become flashpoints in reimbursement battles.
What Happens Next
JPMorgan is seeking to overturn the earlier ruling compelling it to pay Javice’s legal expenses, aiming to suspend advancement and potentially claw back previously advanced funds. If the court sides with the bank, Javice and Amar could face significant personal financial pressure. If not, JPMorgan may still have a chance to recover payments after the case concludes.
Regardless of the outcome, the dispute underscores a critical — and often overlooked — aspect of corporate risk: how the cost of defending alleged misconduct can rival, or even exceed, the cost of the deal itself. For executives and acquirers alike, who ultimately pays that tab is becoming a question as urgent as the allegations that started it.
