Things seemingly went from bad to worse for Frank founder Charlie Javice, who pulled millions out of JPMorgan Chase after the institution fired her for alleged fraud, only to find her new lender caught in a bank run.
Javice pulled her funds out of JPMorgan Chase after the institution accused her of falsifying customer data for her college finance site, Frank.
JPMorgan had purchased the platform for $175 million in September 2021 on the premise that Frank had access to 4.2 million students and graduates.
The bank alleges that Javice paid a professor $18,000 to create four million of the student profiles with a computer-generated algorithm.
Javice denies the allegations, and sued the bank in December claiming the bank used an investigation into Frank as an excuse to fire her from her job with the company, Bloomberg reported.
Federal filings submitted to the Delaware courts on Friday and seen by Fortune now reveal that in the days following the fallout in September 2022, Javice moved her millions into new accounts at Signature Bank.
The University of Pennsylvania graduate confirmed the transition in response to JPMorgans requests for information about three Nevada shell companies which held the Signature accounts.
The amount transferred to Signature is not revealed in the documents, however Javices attorney outlines that the funds previously held at JPMorgan had been her proceeds from the sale of Frank, approximately $28 million.
The document states that across Javices three accounts with JPMorganincluding two irrevocable trustsapproximately $21.4 million had been deposited.
It is unclear how much of Javices JPMorgan balance was transferred to the parallel Signature accounts. Javices lawyer says it was the majority of her funds, though a balance was left with JPMorgan.
Speaking of the move to Signature, Javices lawyer writes: As it happened, that timing was ill-fated.
To the surprise of even the most seasoned players in the banking industry, on or about March 10, depositors at Signature Bank began a run on the bank, thereby increasing the fear and likelihood of what did indeed result: the third largest bank failure in U.S. history.
Signature Bank was closed on March 12 by the New York State Department of Financial Services, naming the Federal Deposit Insurance Corporation (FDIC) as receiver.
The lawyer adds that Javice made the move as she feared JPMorgan would abuse the nature of its banking relationship with her in light of the fraud allegations.
JPMorgan did not immediately respond to Fortunes request for comment.
Extracting the funds
Javice withdrew her funds on the day she feared the bank would collapse, with her lawyer confirming she moved the cash into other major domestic institutions.
Those accounts have now been seized by the U.S. Attorneys Office for the Southern District of New York.
JPMorgan had previously implied Javice was moving her money away from the bank in a bid to hide her assets, which her lawyer Alex Spiro denied.
The fact that Javices assets are now in the hands of the U.S. renders JPMorgans argument moot, her lawyer added.
Whatever argument JPMC might have had for discovery to prevent asset dissipation is now moot, the document adds.
Javices lawyer did not immediately respond to Fortune when contacted for comment.
