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Sec. & Exch. Comm'n v. Javice

Intervenor Government Granted SEC Fraud Action's Stay Pending Parallel Criminal Case

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OPINION AND ORDER The United States of America (the “Government”) moves for an order permitting it to intervene pursuant to Federal Rule of Civil Procedure 24, and to stay the matter until the conclusion of a parallel criminal case pending in this District, United States v. Charlie Javice, Case No. 23-cr-251 (AKH). Dkt. No. 19. For the following reasons, the motion to intervene is granted and the motion to stay the matter is granted. BACKGROUND I. The Allegations of the SEC’s Complaint The United States Securities and Exchange Commission (“SEC”) charges Defendant Charlie Javice (“Defendant” or “Javice”) with violating Section 17(a) of the Securities Act of 1933 (“Securities Act”), 15 U.S.C. §77q(a), and Section 10(b) of the Securities Exchange Act of 1934 (“Exchange Act”), 15 U.S.C. §78j(b), and Rule 10b-5 thereunder, 17 C.F.R. §240.10b-5. Dkt. No. 1. The charges grow out of an alleged scheme to falsely inflate the number of customers at Javice’s company, TAPD, Inc. or Frank (“Frank”), in order to fraudulently induce JPMorgan Chase Bank, N.A. (“JPMC”) to acquire Frank for $175 million. Id. 1. Javice founded Frank in 2017, ostensibly as a trusted online source to help students navigate every aspect of the college financial aid process and to provide students a tool to expedite completion of the Free Application for Federal Student Aid (“FAFSA”). Id. 16. In early 2021, a Frank board member approached JPMC about a possible acquisition of Frank. Id. 32. In July 2021, Frank represented to JPMC through, inter alia, pitch deck materials approved by Javice, documents in Frank’s data room, and statements from Javice, that it had approximately 4.25 million customers. Id.

1, 32-38, 43. According to the complaint, however, Frank did not have 4.25 million student customers or their identifying information, but only had identifying information for only about 300,000 students. Id.

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