Charlie Javice: The Startup Swindler

0:05When Michael Eisenberg and Charlie Javis sat down for a coffee outside Grand Central Station in 2011, they looked like an inconspicuous pair. Maybe a father and daughter catching up, or a professor and a student going over a thesis. Passerbys would never have guessed that Michael Eisenberg was a powerful venture capitalist, and that Charlie DeVise was his newest and youngest mentee. It was over a latte that DeVise painted a picture of her latest business venture. Her plan was to revolutionize the way that college students applied for financial aid. And to make that dream a reality, she would need Eisenberg's venture capital fund, Aleph.

0:52Her business model was a compelling vision. It's not predatory. It's not some new gig app that pays people nine bucks an hour or whatever. is something that supposedly connects students to help that is available to them that they weren't getting access to who wouldn't want to be a part of that. Ten years later, Eisenberg and Davies meet again. This time, they're in Israel. And this time, they were having a celebratory lunch with a slew of Aleph's partners. Davies had just sold her company to the largest bank in the U.S. When Eisenberg writes about this occasion in his blog in 2022, he says he wasn't surprised by her success at all.

1:36But in a few short months, Eisenberg would be eating his words. A lot of people likened her to Elizabeth Holmes, the head of Theranos, as someone who might not have been a subject matter expert, but had big ideas. And, you know, Ms. Holmes is now in a federal prison. Charlie Javis had everything going for her. Limitless entrepreneurial potential, media momentum, and a reputation as a rising star in fintech. But her former business partner, JP Morgan, uses another word to describe Javis. Scammer. But according to the SEC, they are now accusing her of old school fraud. The CO was arrested Monday night at Newark Airport, now faces four counts of fraud and conspiracy that each carry a maximum sentence of 30 years in prison.

2:41This is The Opportunist, an original podcast from Podcast One. You're listening to a story told in one episode called Charlie Javis, the Startup Swindler. I'm Sarah James McLaughlin. Sam Bankman-Fried, Elizabeth Holmes, now this woman. Sometimes when things seem to be too good to be true, they are too good to be true. In this episode, we dive into the story of Charlie Javis, the young entrepreneur whose drive to succeed drove her to deceive.

3:30Anyone who spoke to a young Charlie DeVise knew she was going places. She entered every room with an air of confidence, and her peers described her as intensely focused and ambitious. She was a hot shot in the startup world. You could find her on Forbes 30 Under 30 list and all other hip, tech, young startup spaces. Javis grew up in Westchester County, a wealthy suburb of New York City. She attended private school at the French American School of New York, and it was there that Javis got a taste for business. Even as a high schooler, Javis was aware that good deeds could also look good on a resume.

4:17She founded a soup kitchen in ninth grade and organized a book drive soon after. In the 10th grade, she traveled to Thailand and Myanmar to teach English. It was while she was overseas that she had the big idea for her first startup, PoverUp. This is Jack Newsham, a correspondent for Business Insider.

4:41First started getting some buzz when she was in high school starting this, what was styled as like a nonprofit startup called PoverUp. She and her brother started it, and their goal was to reach 100 million students in high schools and college and graduate programs worldwide and kind of mobilize them to make microloans and help people get out of poverty. PoverUp was Javis' first attempt to make positive change in the world using the startup model. She had a knack for networking and understood at a young age that in order to succeed, she'd have to be in the right rooms with the right people. In 2009, she took that precocious energy to the Microfinance Club of New York, a networking event hosted by NYU.

5:28At just 16 years old, she made small talk with executives and shamelessly pitched PoverUp. It was there she met Howard Finkelstein, a lawyer who specialized in startups and was instrumental in getting PoverUp off the ground. Even that was a little bit of a charade. It certainly didn't reach the number of people that it wanted to reach. It said it was hoping to negotiate partnerships with microfinance, lenders. Two of the three it named said that nothing ever came of it. And a board member told us that Pavrup never ended up making a single loan. Still, her networking skills paid off. Javis managed to leverage the charade to gain acceptance to the Wharton School at the University of Pennsylvania, a prestigious business school.

6:20Although Pavarop was non-functional, she pitched it to gain admittance to the Venture Initiation Program, an elite incubator for student startups. Classmates from the program describe Pavarop as confusing and that Javis was known to hype things up in a way that distracted people from the flaws in her projects. While Pavarop may have started as a noble idea to provide microfinance loans to impoverished people, it quickly became an ace card that Javis played to get prestige and to get ahead. And funnily enough, Pavarup's viability wasn't the only white lie Javis told in college. So at Wharton, just the impremature of Wharton wasn't enough for her.

7:13She made this claim that she had been selected as a Thiel fellow, which is a program funded by the venture capitalist future Thiel. He pays innovative young people$100 ,000 to skip college and just get building right away. And she claimed that she was selected for it. She turned it down. However, the Daily Beast actually got an email where she was not selected for it. While Javis did make it to the semifinals of the Teal Fellowship with her Pavarov pitch, she was never offered the honor. But she didn't let a little setback like the truth stop her. The interesting thing about Javis is that she seemed to intuit that the stories you tell about yourself can become true, if repeated enough times.

8:03If she continued to present herself as a rising star, she would become one. And this strategy worked. She continued to be recognized in college by business publications for her work on Pavarup. And what's interesting to me is that it starts to create this feedback loop. Publications are covering her because she's accomplished and important, and she's accomplished and important because there's all these publications writing that she's accomplished and important. Javis was gifted at cultivating the image of the do-gooder disruptor, a young woman who wanted to change the world and wasn't afraid to innovate.

8:42Her focus was always on projects that aimed to help people, and that mission was a fantastic smokescreen. Who would scrutinize a promising female entrepreneur with good intentions? In other words, people wanted to trust her because she represented an ideal in the tech industry, especially as a woman in the boys' club. I think there's a recognition among a lot of investors that their networks tend to favor the Young Boys Club. There's graduates of the same college who are gone to over and over again, people who come out of the same snazzy programs like Y Combinator. And she ticked some of those boxes, but not others.

9:24So I think there might have been some attractiveness there. with media momentum behind her and a degree from Wharton Javis was done with Pavarop by graduation it didn't matter that Pavarop had never officially registered as a non-profit and had never actually dispensed a loan it had served its purpose putting Javis on the map she was ready for her next big project and she was on the hunt for the next hole in the market it. Drawing on her own college experience, she set her sights on the FAFSA. The FAFSA is the Free Application for Federal Student Aid. It's something that every high school senior with ambitions to go to college is going to have to go through if they want financial aid, and is going to find frustrating and boring.

10:21And I mean, it's one of their first taste of adulthood, and it is a bitter, disgusting taste. And the stakes really couldn't be higher. Most high school students have never filled out official forms. By the time they get to the FAFSA, they are unprepared to deal with this complicated and high-stakes application. The information you input into that form, it's your parents' assets and incomes, but also you're the student's assets and incomes, determine what the federal government says it can extend to you in grants and in loans. It's the sort of base level that a lot of colleges look at when they're trying to figure out, okay, you know, how much aid does this kid need?

11:02The price tags that ultimately come out of that, for a lot of families, they're kind of the make or break thing.

11:10Around 85 % of all undergraduate college students apply for financial aid through FAFSA. To Javis, this looked like a huge untapped market of young people who needed guidance throughout the process, and this could be her way in. Blending her Wharton education with her startup mindset, Javis set out to turn one of the most widely hated applications of all time into a simple app, an app called Frank. What Frank was trying to do was up the completion rate and success rate of the FAFSA. Its main innovation was basically breaking this very long and not super user-friendly form that existed at the time into a bunch of small bites.

11:58The same way that investing apps have made investing simpler, Frank was supposed to turn a boring, bureaucratic, high-stakes process into a lot of small bites. Javis launched Frank in 2017, when she was just 24 years old. Here she is in an interview with CBS New York, giving the lowdown on Frank and FAFSA. It all starts with FAFSA, right? Walk us through that. Oh man, yes. So everything, the first step is FAFSA. FAFSA is the free application for federal student aid, and it unlocks thousands of dollars for families. She managed to raise an astounding$20.5 million through three rounds of funding, and was backed by industry leaders like Mark Rowan of Apollo Global Management and Michael Eisenberg of Aleph.

12:56The platform was advertised as a streamlined FAFSA process that reduced application time from grueling hours to a few minutes. Getting financial aid might seem really, really complicated, but at Frank, we've really simplified it for you. In a 2018 interview promoting Frank, Javis even claimed that Frank users received an average of$28 ,000 in aid. At the time of the interview, that figure was twice the average aid package dispersed through FAFSA. With impressive numbers like that, it looked like Javis had solidified her role as an industry protege. She played the part well, but how long could she last before she was unmasked?

13:44Turns out, it was sooner than anyone could have expected.

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15:59Charlie DeVise seemed untouchable. In 2017, DeVise founded Frank, a company that promised prospective students a simpler way to sign up for financial aid. The idea soon catapulting DeVise into the spotlight and on camera. The startup prodigy was revolutionizing financial aid for college students through an app called Frank, while posing as a media darling in fintech publications. But just like with her previous startup, PoverUp, early alarm bells began to sound around what Frank could actually deliver. Mark Kantorwitz, who's a student aid advocate and expert, actually, he was one of the first people to sound the alarm on Frank.

16:48He filed records requests with the Department of Education just to try to figure out what was going on here. Javis claimed that students who use Frank received twice the amount of financial aid than the average student borrower. But there was nothing about Frank's system that was capable of doubling the amount of financial aid a student received. But no one seemed to notice. Or maybe they just didn't care. Javis continued to make up numbers at random about Frank's performance. And her star finally began to rise. Here's Jack Newsham from Business Insider again. The company was like out there and trying to get some buzz in 2017, 2018.

17:35That's when student aid experts like Kantorwitz are starting to take note of Frank and trying to figure out what's it actually doing? Where's the value add? It's 2020, 2021 that she starts getting mainstream exposure. She did a piece with the New York Times in 2018 about financial aid that ended up having to have a really long correction appended saying this fact was wrong. This fact was wrong. This fact was wrong. She spoke to the Wall Street Journal for a piece that same year that also had a long correction. She was talking to a local ABC station in New York in 2019 and using numbers that, again, experts can't really make sense of.

18:15Like a seasoned professional, Javis leveraged high-profile features for more high-profile features, positioning herself as an expert in the field without having any actual expertise. In 2021, the stage was set. The pandemic startup boom was going strong, and the market was hot for the next great idea. In other words, it was time to make some money on Frank. Sites were set on J.P. Morgan. An investor planted the seed in March of 2021 by forwarding an article about Javis and Frank to a J.P. Morgan executive. Interest in the deal picked up from the bank by July.

19:08By September 2021, a deal was struck. JP Morgan would acquire Frank for$175 million. Javis was just 28 years old. Charlie Jarvis was riding high, and in 2019, the young founder of Frank Bank landed a spot on the Forbes 30 Under 30 list at just 26 years old for what she called the Amazon for higher education. Business Wire described Frank as the leading financial planning platform for students while reporting on the deal. JP Morgan thought they had a gold mine on their hands. J.P. Morgan didn't view Frank as a business that wanted to keep going. It viewed Frank as an email list, as supposedly more than 4 million students who had a positive financial relationship with the Frank brand.

20:07They thought they could essentially parlay that saying, hey, Frank and J.P. Morgan are partners now. You should bank with J.P. Morgan, you young professionals. And it didn't work out that way. The most valuable thing to a modern company isn't money. It's data. And with 4 million users, Frank should have been overflowing with valuable data about college-age people. But in reality, Frank didn't have 4 million users. At most, they had 300 ,000. Up until this point, Javis was the master of fake it until you make it. But had she taken it too far? We don't know for sure why Javis misrepresented the size of her user base so drastically.

20:56Was it a mistake? Was it delusional? Or was it a brazen money grab by a kid who thought they could pull one over on one of the largest financial institutions in the world? Acquisitions of this skill have to go through a process of due diligence. This refers to the formal investigation and verification process that starts after an offer is made, with the intent to confirm that an asset is as advertised. In the case of the Frank acquisition, Javis had to prove she had 4 million users she absolutely did not have. So how would she do that? Javis turned to something called synthetic data. This is data that is created through generative AI models and is made to look and behave like real-world information.

21:48In business, it is often used as a placeholder when real data is in limited supply or hard to obtain, like when financial information is protected by privacy laws. In order to provide J.P. Morgan with 4 million fake users that appeared legit, Javis hired someone to complete a synthetic data project that turned 300 ,000 users into 4 million. JP Morgan has claimed that Javis was kind of pushy during the diligencing process, and that actually it wasn't ABC at DEF.com. There was some genuine data in there. However, it was not data of genuine frank customers. So in essence, it could pass a smell test, but that she pushed back, citing privacy concerns on the desire to go a little more in-depth.

22:47Without knowing that the customer list contained synthetic data, J.P. Morgan had a third party analyze the list. Although, it appears they declined to review the third party's findings before confirming the September sale three days later. It looked like Javis had gotten away with it. Once the checks cleared, so to speak, J.P. Morgan went on to do what they had always intended to do, marketing their banking services to Frank clients. They started this initiative with a test marketing email to 400 ,000 of Frank's alleged 4 million clients. It did a test marketing email to a subset of these Frank customers, and it said the test was a complete disaster.

23:34They sent about 400 ,000 emails, a bunch of them bounced back and only just barely more than 100 people actually clicked the link in this email. Okay, maybe I'm going to bank with J.P. Morgan. Only 28 % of the emails were even delivered and just 1.1 % were opened. Obviously, this was an immediate red flag for J.P. Morgan. And that's when they said they started going through in detail all the historic frank communications, internal correspondence and whatnot, all these sort of documents and records that they'd acquired when they acquired the business. And that's when they say they realized, oh, crap, we were Swindle.

24:19Swindle is putting it lightly. Javis had almost gotten away with highway robbery, but she didn't cover her tracks well enough. J.P. Morgan had been burned, and they weren't taking this embarrassment sitting down. They were going to take Javis to court and it wasn't going to be pretty. The following products are intended for adults. Consult with a physician before use if you are pregnant, nursing, or have any known or suspected allergies or medical conditions or are taking any medication. FDA has not evaluated these products for safety or efficacy. Sometimes you want the ritual of a drink without the heaviness that comes with alcohol.

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25:49Now to a high profile fraud case that's literally happening in front of us in real time. entrepreneur charlie javis literally faked it until she made it by creating fake customers for her startup frank to make it look more appealing in a 175 million dollar deal with jp morgan once jp morgan ran a test marketing campaign they realized the client list was a ghost town In December 2022, just 15 months after the Frank sale, J.P. Morgan sued Javis and Olivier Amar, the CGO of Frank. It didn't stop there. As the civil suit raged on, Javis was arrested and charged with fraud by the Department of Justice in April of 2023.

26:41And if that wasn't enough, she's also being sued by the U.S. Securities and Exchange Commission, known as the SEC. What the case boiled down to in court were the questions of Javis' intent and the failure of J.P. Morgan's due diligence process. In her response to J.P. Morgan's accusations, Javis claimed that J.P. Morgan specifically asked for synthetic data, citing privacy concerns for the financial history of frank users. Javis also argued that J.P. Morgan should have known better than to believe Frank had 4 million users. In fact, she says she never misrepresented Frank's user base at all. Javis explained that she reported to J.P.

27:30Morgan that Frank's site had over 4 million visitors, not formal users. To back up their claim that J.P. Morgan knew how small Frank's user base was from the beginning, Javis' legal team points to Frank's acquisition price. While$175 million doesn't seem like a drop in the bucket to the average person, it's an astonishingly low price for a company with 4 million users. Once again, here is Jack Newsham from Business Insider. A$100 million acquisition when you're JP Morgan isn't super significant. I mean, you don't necessarily need to scrub through this like you would if you were considering acquiring a distressed bank with billions and billions of dollars in assets.

28:19This was a marketing play, not something core to J.P. Morgan's strategy. So, yeah, it wouldn't surprise me if they did not bring their A game to this. Let's say J.P. Morgan totally dropped the ball on this deal. Javis and her legal team, which includes Elon Musk's personal attorney, wanted$27.9 million in damages from the bank. Is it J.P. Morgan's fault they were swindled? How much can J.P. Morgan be blamed for in their role in this circus? Well, a little bit, actually. In April of 2023, the Office of the Comptroller of the Currency scheduled an audit on J.P. Morgan's due diligence and deal-making procedures from 2021 to 2022.

29:10Were there mistakes made on both parties in this deal? The debate was brought to criminal court in March of 2025. After six weeks of trial and only four hours of jury deliberation, Javis and her CGO were found guilty of brazen fraud. Javis is looking at up to 30 years in prison. Currently, she is awaiting sentencing. She's out on bail in sunny Florida teaching Pilates. Forever the opportunist, Javis is also filing for a mistrial, claiming that her right to a fair trial was compromised due to shortened opening statements. Her trial with the SEC has yet to wrap up, and her civil suit with J.P. Morgan is ongoing.

30:01JP Morgan shot itself in the foot in some regards by doing the sort of standard corporate indemnification agreements that happens. They're having to foot the bill for Charlie Javis's defense, and she has one of the best defenses money can buy. She's got a team from Quinn Emanuel led by the trial lawyer Alex Spiro helping her through this ticket of litigation, and JP Morgan's having to pay for it because they, in essence, agreed that they would.