There was Elizabeth Holmes. Then there was Sam Bankman-Fried. This year, will it be Charlie Javice?
Back in 2011, Javice was a student at the world’s oldest business school, Wharton at University of Pennsylvania, where she founded PoverUp.
Its goal was “to let socially minded students learn, connect and invest in microfinance and social businesses.” She told media she was inspired by her time volunteering in a Thai border village.
“So you could pick projects from around the world that included water, sanitation, microcredit and women’s empowerment,” Javice told the student newspaper in 2011. “All of this is built around a socially minded network for students to be able to share their passions, be able to get that support network.”
In 2021, Charlie Javice was listed in the Forbes Top 30 Under 30. In February, she will be tried for fraud in New York City. Where did it all go wrong?
With the clout she earned from PoverUp, in 2016 Javice moved on to Frank, her next project. Frank was a digital platform that streamlined federal student loan support applications.
Frank seemed to have it all. There were 4.5 million users accessing a simplified application process, built in scholarship guidance for students, financial planning tools and even cash advances of federal loan money.
Javice had raised USD $20 million by 2021. When Frank was acquired by JP Morgan for USD $175 million, Javice was paid USD $10 million. The deal also included a position in JP Morgan and a massive retention bonus.
Why was JP Morgan interested? Like many platforms, the real product was never the software but the user. Frank would be an archive of users’ financial situations from the start of their adulthood. It could be used to funnel them directly into the Morgan Chase banking system.
The problem, according to prosecutors, was that the users were never there. Instead of over 4 million, there were perhaps a few hundred thousand. Prosecutors allege Javice “falsely and dramatically” inflated the user base during the JP Morgan deal.
The trial was scheduled for late October 2024 but has been postponed to February 2025 at the request of the defence.
Whether or not her social entrepreneurship was as dubious as Frank may never be known. But Javice certainly did learn that fudging the facts in multimillion-dollar Wall Street deals is a different gambit than selling a social justice story.
Like the Theranos and FTX founders, Javice’s meteoric rise may end up looking more like street fireworks.
Article image courtesy of @center999 via Unsplash.
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