JPMorgan Chase & Co. was hit with $115 million in lawyers’ bills for Charlie Javice and a second executive convicted of defrauding the bank, yet another twist in a years-long legal saga that’s captivated Wall Street.
The defense tab, revealed last week when Javice was sentenced to seven years in prison, is roughly two-thirds of the $175 million the bank paid for Javice’s student-finance company, Frank. A Delaware court previously ruled that the terms of that deal required the bank to cover Javice and co-defendant Olivier Amar’s legal costs.
The legal bill is the latest fallout for JPMorgan from the disastrous transaction. It also illustrates how expensive high-stakes litigation involving top-flight lawyers can become. There are few litigants besides the nation’s largest bank that could afford to pay such costs.
“Huge, huge number,” said Kevin O’Brien, a former federal prosecutor now working as a white-collar defense lawyer in New York. “She had a lot of high-priced legal talent.”
It’s unclear why Javice and Amar’s defense costs were so high. They appear to dwarf those of Theranos Inc.’s Elizabeth Holmes, who amassed at least $30 million in legal bills for her defense, according to a government filing ahead of her November 2022 sentencing. Holmes got 11 years in prison.
Quinn Emanuel Urquhart & Sullivan, one of Javice’s law firms, declined to comment. Her other lawyers didn’t respond to requests for comment. Lawyers at Kobre & Kim who defended Amar also didn’t respond to requests for comment. JPMorgan declined to comment.
To put the $115 million figure in perspective, a high-priced lawyer billing $2,000 an hour would have to bill eight hours every day, including weekends and holidays, for nearly 20 years to reach that total.
At trial, 19 lawyers officially appeared for Javice, 16 for Amar, and the two teams pursued different strategies on certain issues. For all the lawyers in court, there would have been even more lawyers, paralegals and support staff back in the office, O’Brien said. It helps if someone else is picking up the bill, he added.
“If you’re a defendant and you’ve got the backing of a board or an insurance company, you want to leave no stone unturned,” said O’Brien. “The sky is the limit.”
JPMorgan tried to avoid paying for Javice and Amar’s defenses. But a Delaware judge ruled in 2023 that the fraud allegations were covered by the Frank merger agreement, which required the bank to advance legal costs for the pair. Javice and Amar both became JPMorgan executives after the deal closed but were fired after the fraud was discovered.
Javice and Amar’s legal costs are not just for the criminal case. The pair were also sued by JPMorgan itself as well as the Securities and Exchange Commission. Both civil cases were put on hold until the criminal one is resolved. Javice will incur even more expenses appealing her conviction and sentence. In a Monday court filing, her lawyers said they expected JPMorgan to continue to cover those costs as well.
JPMorgan can try to reclaim the money from her, and US District Judge Alvin Hellerstein included the legal costs in the $287.5 million restitution order that accompanied her prison sentence. Javice’s lawyers asked the judge on Monday to reconsider his order, contending that JPMorgan wasn’t entitled to recover defense legal costs.
Even if the order remains unchanged, the bank is unlikely to get back more than a small fraction of the total amount. Javice is only required to pay 10% of her income toward the order after she leaves prison, and it expires in 20 years.
Early on, the bank complained that it was being overbilled by Javice’s “army” of lawyers. In 2023, her team of lawyers was led by superstar litigator Alex Spiro, who is well-known for frequently representing Elon Musk. Spiro, who works at Quinn Emanuel, was charging Javice $2,025 an hour, according a court filing at the time. He declined to comment.
A New York jury convicted Javice and Amar in March, finding they lied and faked data to claim their site, which offered a free tool to help students fill out the Free Application for Federal Student Aid, had 4.25 million users when it actually had fewer than 300,000. A data scientist testified that he was paid $18,000 by Javice to create “synthetic” user data to show JPMorgan.
Both defendants tried to focus jurors on what they claimed was JPMorgan’s hurried and flawed due diligence in the deal. In determining her sentence, the judge said he was considering her “conduct, not JPMorgan’s stupidity.” Amar also unsuccessfully tried to distance himself from Javice, saying she deceived him along with JPMorgan.
The defense ultimately called only a few witnesses, one of whom was Apollo Global Management Chief Executive Officer Marc Rowan, an investor and board member at Frank. The billionaire more recently wrote to Hellerstein urging leniency for Javice.