A federal judge in New York last week dismissed an indictment charging former Frank executives Charlie Jarvis and Olivier Amar with bank fraud and other crimes in connection with Frank’s $175 million sale to JPMorgan Chase.
Judge Alvin Hellerstein denied Jarvis and Amar’s request after hearing arguments yesterday on the defense’s motion to dismiss.
Jarvis and Amar were indicted last year on charges of bank fraud, securities fraud, wire fraud and conspiracy to commit bank fraud and wire fraud in a lawsuit filed by JPMorgan alleging fraudulent overstatement. To trick banks into buying them, they targeted the customer base of Frank, a fintech company that specializes in student loans.
In response to JPMorgan’s lawsuit, the Justice Department and the Securities and Exchange Commission alleged that Messrs. Jarvis and Amar instructed Frank employees to falsify numbers to support claims to the bank that Frank had more than 4 million customers, when in fact it had only about 300,000.
When the employees refused, Jarvis allegedly hired a data science professor from a New York university to create fake student accounts, and Amar negotiated with an outside data compiler to obtain millions of student data for $105,000, according to the SEC.
In a motion to dismiss the indictment filed May 20, Jarvis and Amar argue that the charges against them lack specificity and that the government is trying to cover up holes in the indictment by leaving the defendants to “infer details from millions of pages of documents compiled from the files of dozens of entities and individuals.” “The law and fundamental fairness require nothing less,” Jarvis’ lawyers wrote in the motion to dismiss. “Mr. Jarvis is entitled to an indictment that provides meaningful and understandable notice of the material facts of the alleged scheme.”
“The government’s current position appears to be that the defendants must prepare to defend themselves against charges that they defrauded dozens of entities – the scope of this conduct is never suggested in the indictment, discovery, or the government’s representations to the court – and must continue their defense without providing any details of when, how, or through what statements or omissions they allegedly committed the fraud,” they continued. “This lack of detail merits dismissal of the pending charges.”
Additionally, both Jarvis and Amar’s complaints allege that the indictment against them “does not allege bank fraud.”
“The government, without citing any case law, erroneously asserts that the bank fraud statute applies to any transaction involving a bank, whether a banking transaction or other commercial transaction, such as the acquisition of a nonbank entity,” Amar’s lawyers wrote in the motion to dismiss. “Such an interpretation significantly expands the scope of the bank fraud statute, improperly creating a ‘blanket bar on fraud’… and ‘federal law.'”[ing] These are funds that have nothing to do with the banking system.”
Hellerstein It did not provide details on why it denied the motion to dismiss.
JPMorgan declined to comment on the matter. Jarvis’ lawyer, Alex Spiro of Quinn Emanuel Urquhart & Sullivan, did not respond to a request for comment.
Both defendants pleaded not guilty.
