Serialously with Annie Elise - 31: 28 Year Old Con Woman Uses Her Beauty & Charm to Defraud $175 MILLION Dollars | Anna Delvey 2.0

Episode Date: July 10, 2023

The case of financial fraudster and fake German heiress Anna Delvey took the world by storm and even inspired a hit Netflix series. People were captivated by her scheme to secure a 22 million dollar loan to start an art foundation by pretending to have a German trust fund worth over 40 million dollars. If you’ve never heard of that case, the craziest part was that she jumped through so many hoops, flying by the seat of her pants, AND it was all for nothing because she never even got the money for the foundation. Before the loan was approved, Anna’s lies, forgery, and financial misgivings caught up to her, and she was arrested for fraud and exposed to the entire world. Now there’s a new scammer in town, and some people say she blows Anna out of the water. Your True Crime BFF, Annie Elise  All Social Media Links: https://www.flowcode.com/page/annieelise_ About Me: https://annieelise.com/ For Business Inquiries: [e-mail] Charlie Interview Credit: www.BillCarmody.com https://www.youtube.com/watch?v=2vM0bj8mPCw Today's Sponsors: Better Help:  Give online therapy a try at https://www.betterhelp.com/ae and get on your way to being your best self. PDS Debt: Get your free debt analysis by going to: https://www.PDSDebt.com/Save

Hey, true crime besties. Welcome back to an all new episode of Serialistly with me, Annie, your true crime bestie. Here to break down yet another wild, crazy-ass true crime case. And I just have to say, I knew I was going to be recording this episode today. And if you're watching the YouTube version of this, this will make much more sense. But like, I don't know what's going on with my getup today. So I apologize in advance. Let me break it down for you podcast listeners. But I'm wearing like these black bike shorts that look like have a lightning bolt on the side of them.

I'm wearing a Guns N' Roses graphic tee. And then let me just, I'm going to, we need to do a close-up of the shoes Roses graphic tee and then let me just I'm gonna we need to do a close-up of the shoes here guys like let me just show you. I like got these new platform Crocs which I am a Crocs virgin. I have never owned a pair of Crocs in my life. Personal choice but like I tried on my friend Callie's over the weekend and they were so extremely comfy. These ones are like not traditional Crocs. They look like a platform with like a 90s platform with like a big slide strap across the top. So I bought them and then like I never thought I would wear Crocs. I never thought I would wear the little charms on it, which fun fact they're called gibbets, but I kind of went wild. And so like I'm gonna,

you can see this on the video version, but let's, let's get a closeup. Let's zoom in on this bad boy. I basically got the charms on here that represent everything I love in life. I have a croissant on there. I had, they don't have Diet Coke, but I put a regular Coke bottle on there. Popsicles, seashell for the beach. Um, on my other one, I have an avocado cause I'm obsessed with codos and like, it's just a nice way to personalize my feet. These are really cool, actually. So maybe I'll put a link to these in the description or the show notes. But anyway, so I'm like wearing these Crocs with these charms all over them. I'm wearing these bike shorts with a lightning bolt.

This Guns N' Roses t-shirt. I don't know what's going on, but whatever. Regardless, I've got a insane case for you today, guys. Now, we all know that the case of the financial fraudster and fake German heiress, Anna Delvey, took the world by storm and even inspired the Netflix hit series that people couldn't stop talking about. And she just kind of became a sensation internet sensation with the memes with everything like pure gold but more than that people were just captivated by her scheme

to secure a 22 million dollar loan all to start an art foundation by pretending to have a german trust fund worth over 40 million dollars now if you've never heard of that case, the craziest part of it was that she jumped through so many hoops, flying by the seat of her pants the entire way, and it was all for nothing because she never even got the money for the foundation. Before the loan was approved, Anna's lies, her forgery, and her financial misgivings all caught up to her, and she was arrested for fraud and exposed to the entire world. But now Anna hold my beer because there is a new scammer in town and some people say that she blows Anna out of the water because unlike Anna she actually ended up securing a mind-blowing

amount of money from the banking giant J.P. Morgan, so much so that she is now facing nearly 100 years in federal prison. So move over, Anna Delvey, because in this episode, we're discussing Charlie Javis. Which also, let me just pause really quick here and say this. I feel like if for some random reason, Anna Delvey actually ends up listening to this podcast ever in her life she's going to be like super pissed off at the comparison so I'm sorry Anna and you are welcome on the podcast anytime to tell your side of the story would absolutely love to have you here but did Charlie really pull off one of the largest financial bank heists in American history or was this all just some huge misunderstanding that spiraled out of control?

For those of you watching on YouTube, comment along and tell me all of the red flags that you see in this story because it does have a huge twist to it. And then there's a new woman on the scene, Charlie Javis. 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. She founded a company called Frank. Now to a high profile fraud case that's literally happening in front of us in real time. These are very serious charges. When you look at wire fraud and mail fraud, they can carry up to 30 years for each count. First, the Wall Street Journal saying that J.P. Morgan is alleging that a company it purchased is accusing it of fraud, effectively.

A college financial aid platform called Frank. Getting financial aid might seem really, really complicated, but at Frank, we've really simplified it for you. Charlie Javis is a brown-haired, blue-eyed young woman behind the company called Frank, a startup designed to help students navigate the notoriously complex and headache-inducing task of figuring out college financial aid. Her vision was to simplify this process, and in doing so, she caught the attention of J.P. Morgan, and we will get to that shortly. First, we need to talk

about Charlie, how she rose to success, and her incredibly orchestrated house of cards. In addition to Anna Delvey, maybe you could compare her to Elizabeth Theranos, the Theranos lady. What's her name? Elizabeth Holmes, the drop of blood lady. I mean, girls, you are giving us a bad name. So Charlie grew up in Westchester County, New York, a very wealthy suburban county where she attended the French American School, a private school with a hefty annual price tag. But things changed when the time came for Charlie to decide on college. According to Charlie, she considered attending school in Canada in order to cut costs. However, thanks to family help, sc

loans, she attended the W at the University of Pens from the outside looking to get there looked preti has an acceptance rate of was accepted during early let's hear your story. Ri you're an entrepreneur at heart.

We'll love to hear how you got to your current role as founder and CEO of Frank. Yeah, well, I'd have to say I was always really just guided from the concept early on that if you really do what you love, you'll figure out a way to make money and do well and do good in your career at the same time. And from a really early age, having grandparents that were Holocaust survivors, education was always kind of the first and most important thing in my family. And I've been lucky to have been given the opportunity to attend world-class

institutions. And if you have the ability to pay it forward, it's one of the kind of best things one can really do. And so that's kind of guided me all the way, but I would say sustainability was also front and center. When I was before high school, I started a soup kitchen at my local high school. And I think that kind of gave me the entrepreneurship bug of starting things after being told no 10,000 times, whether it's insurance issues or just our school doesn't do that to a bunch of different reasons to finally succeeding. And now it's in its 11th or 12 is fantastic. During her in the spring of 2011, sh

startup called power up p as a nonprofit and its mi micro loans to entreprene In just one month, Charli had already partnered with groups at 50 schools worldwide, which earned her a spot at number 99 on the list of most creative people by Fast Company back in 2011. Charlie was hustling, reaching out to potential donors, investors, and big-name schools like Harvard and Chicago Booth, Charlie had been on a non-stop tour,

drumming up as much interest and support as possible. The Poverup's then-COO seemed pretty optimistic about the future of the company, and in a company-wide email back in 2012, they wrote, Charlie has been whoring herself out effectively recently, and we have some potentially new and exciting opportunities coming our way. Now, according to some of Poverup's internal emails that Forbes magazine reviewed, Charlie had been rubbing elbows with some really heavy hitters in the industry, which led Charlie to getting her name mentioned in major media outlets in the financial industry. The buzz about Charlie, this young, innovative college student, was so strong that it even got her an interview for the Thiel Fellowship in 2012.

This program gives $100,000 to students to either start a business or embark on a research endeavor. Charlie was up against some pretty fierce competition, but apparently she ended up stepping back from the competition saying she wanted to continue her studies as reported by a tumblr post from someone over at poverty however according to Michael Gibson a feel foundation veteran he had a much different take on Charlie he said and I quote she was never offered a fellowship and it bothers me that she is going around saying that because of her personality we didn't trust that she is going around saying that. Because of her personality, we didn't trust that she could get started in a real way. In 2013, Charlie graduated from Wharton with a degree in finance and legal studies, and she did so in only three years, which is extremely impressive, guys. However, her startup, PoverUp, was no longer shaping out the way that she had once hoped.

Despite claims of partnerships with influential organizations and individuals promising major growth, some of these collaborations were fabricated entirely or never actually played out how Charlie said they would. This wasn't surprising to many of her classmates at Wharton either, who described her as nice but that she had a tendency to name drop and portray herself as this larger-than-life image than what the reality really was and who she really was. So after college, Poverup was done, and Charlie still had an overall excellent reputation as this innovative, brilliant, and influential businesswoman. So she capitalized on that. And from there, Charlie had another idea, this time for a job search product that she called TAPT.

But as ideas evolved, the goal turned into instead developing an alternative to the traditional FICO credit score, a system that lenders use to determine the amount they're willing to loan potential borrowers. So to do this, she would need around $10 million in funding from investors. However, this shift quickly hit a roadblock. Charlie found that getting the necessary compliance approvals across different states for her product was more of a hurdle than expected. It required way, way more than the $10 million in seed funding that she was trying to raise at the time. On top of this, she was having major cash flow issues, like a $500,000 deficit type of cash flow issue. And she was also having trouble paying her employees. So she decided to let all of the

employees go and she said that it was the hardest thing she ever had to do in an interview she gave. And I bet it was because apparently many of these employees were close friends of her and some of them still don't talk to her because of this to this day. So now Tapped over, but Charlie wasn't. Later in 2017, Charlie relaunched the company, changed the name to Frank, and shifted its focus to simplifying the student loan application process and making higher education more accessible. Charlie hired on a new co-founder and CTO named Addy Amasi in 2016. He and Charlie ended up having a falling out and he sued Charlie and the company for failing to pay him and failing to give him 10% in equity in the company frank which he says that Charlie promised him after he joined. Charlie ended up being ordered to pay him $35,000 and Charlie has never spoken about this publicly but it seems that she just kind of moved on.

Nothing was going to stop her from reaching the success that she wanted. Now, the name Frank was supposed to make you feel like you were working with a trustworthy relative, an uncle or a cousin that you would possibly seek advice from. In interviews, Charlie explained her vision for Frank, saying, in an industry lacking honest players, we wanted to represent transparency, honesty, and a supportive presence for our users. That's why we chose the name Frank, as it symbolizes honesty. But what we're about to get into, some people say, is straight up fraud. Each year, there is a whopping $150 billion in federal student aid that is up for grabs. This pot includes grants, loans, and work-study opportunities. But to get a slice of that, students need to fill out the Free Application for Federal Student Aid, or also known as FFSA for short,

which I'm just going to call it FAFSA. In a survey of 2,000 undergrad students and their parents about whether they filled out the FAFSA form, it turned out that only 25% of undergrads finished the FAFSA in the first month that it was open. Even more surprising, only 77% of them ended up completing it at all. Now, not doing the FAFSA means missing out on some big opportunities. Federal grants are basically free money for college. The personal finance site NerdWallet looked over the numbers and found that students eligible for Pell Grants left $2.6 billion in free FAFSA college aid on the table back in 2018, all because they didn't submit the FAFSA. So this got the wheels turning. It got Charlie thinking. She studied the facts and studied the numbers. We think there's a white space for a private

company to complement all the work and really handhold people through the process in a scalable, sustainable way and know that this is a company that stands for a positive mission where we could really get behind this. And that's what we're building here. So I totally understand. I mean, first of all, it's incredibly confusing for the average person to be able to go in and even dissect everything you just said, unpacking what exactly the government is interested in and understanding the way the bank is making their nickel, understanding exactly sort of why, you know, the college isn't your friend financially because they're looking to make money too. So all of that stuff is all interesting. But I think what you're saying in terms of that guided

process is help me understand when I hire your firm to help me figure all this stuff out, like what is it that you're actually doing for me and my family to make sure that I'm able to get my kids the best possible financial route to college education? So the first step with financial aid is looking at FAFSA. And that's the Free Application for Federal Student Aid. This one form is responsible for determining how much money you as a family are expected to contribute towards your college education. And that form has been a policy issue for the past 20 years. The formula that is what is important in this form when you input the information spits out

this magic number called your EFC, this expected family contribution. And it seems like a black box, so no one understands it. And it's worse because in order to get this number that no one understands, you have to go through hours of pain and labor to be able to submit your information. So what we do is make the FAFSA form, and this is the first product, a lot easier and

people are finishing it in under five minutes. And so it's really easy. It's available on your phone, which, you know, a smartphone penetration today is extremely important. Many people don't want to go to the library to find a desktop or to their school. So this is where they are and we reach them there. Super easy to use. Her ambition to turn her startup into an Amazon for higher education, so to speak, or even a TurboTax, but for financial aid, turned out to be quite an idea. But at first, Charlie had some challenges in convincing investors that this would actually work. And the major roadblock, and you might hear it from other female entrepreneurs who are trying to pitch like tampon companies or like underwear. Who knows. But male investors just don't know about that whole segment of the market. Now try and take a segment of the market where investors who are usually wealthy have inherited it or made their money have zero exposure to FAFSA or the financial aid process. And so it's almost like take odds where you might

have 15, 20% female investors. Now flip it to people where literally maybe one person out of the hundreds I've spoken to has had personal exposure with it. And that's the largest roadblock in terms of female. I'd have to say I've had amazing male mentors in my life. And I think when you get to a position where you are so early on in your career it actually makes you kind of earn trust and earn respect a lot earlier on because of all the roadblocks you may have faced kind of moving up but charlie quickly overcame that roadblock and two well-known billionaire ceos in the financial tech industry backed some of the funding for frank they too saw what seemed to be a great idea that would immensely help American families. So with funding from her early investors, Frank became a reality,

and this was extremely impressive to outsiders looking in. You have this girl against all odds, and now she has the financial backing of billionaires who believe in her vision. Charlie ran into an issue later in 2017 when the Department of Education accused Frank of potentially misleading customers to believe that Frank was affiliated with the U.S. government or part of federal financial aid for students. Frank later had to change its web address and clarify that they were not official government partners, and that was as a result of a settlement in 2018. Charlie's attorney at the time commented that it was just an issue of trademarks and nothing more. Frank also raised some eyebrows in the education sector. a New York Times op-ed that was written by Charlie was later edited to include correction due to inaccuracies in the way that she depicted the free application for federal student aid, also again known as the FAFSA process. The same process Charlie said her company simplified and

claimed to know so much about. Why were edits now needing to be made? But after that, everything seemed to be smooth sailing for Charlie. Frank started exploding. By October of 2018, Frank raised $16 million in funding, and it helped more than 300,000 students receive $7.5 billion in federal financial aid. In November 2018, Charlie was named in Forbes 30 Under 30 in Finance. She was really climbing the ranks and making a huge name for herself and for her company, which landed her many opportunities to be featured on many news segments and talk shows, all to talk about Frank and further spread the word about her company. This is an acronym that looms large in the lives of many families. FAFSA, F-A-F-S-A. My kids are 16, thinking college.

Your kids are a little bit younger, but everyone's thinking college. Yeah, and there's so much to learn about this, including the fact that the choice of your kid's major could affect the loan rate they get if they're borrowing money to go to school. But don't worry. We have someone here that can help us with everything that we need to know. Let us introduce you to Charlie Janfies, founder and CEO with WithFrank.org, a company that helps students with the financial aid process. Thank you so much for being here with us. 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. And so it's loans, it's grants, it's scholarships, and it's really the one application that you need to do to get access to all that aid. And who should apply, who should file the FAFSA? Because as you know, there's so many six-figure income families in our region. I mean, that's a Metro North conductor married to a veteran cop, right? Oh, yes. So we like to say there's no one too poor to file FAFSA or too rich to file FAFSA. And so if you have a household income that's probably $250,000 or under, you should likely apply. That being said, if it is over, you still have opportunities for scholarships and grants,

so it's for everyone. So take the few minutes it takes to apply and really see what you're eligible for, because that's the best starting point you can get before going to college. So your company, WithFrank.org, is about two years old. You've already helped about $7 billion in funds for higher education. And the best part is it is free for the consumer and the students that are signing up. So how does this all work? Yes. So it's totally free. That's really important to us for all students to benefit from. So a student takes a picture of their tax returns. Then we do

all the tax math for you. So no math errors that can put you into very complicated verification, very simple language. We take a flow that might take hours with the federal government, and most students take four minutes with us. So that's more or less how it works. You see how much you're eligible for, then you can go to school, feel confident, see what your bill is, and then figure out the gap to help you. In 2019, Charlie was named in Crane's New York Business 40 Under 40. But the following year, Charlie ran into another issue. In 2020, bipartisan Congress members raised concerns about Frank's supposed deceptive practices, and they asked the FTC, also known as the Federal Trade Commission, to investigate. The worry was that Frank might be creating a sense of a false optimism and even confusion

among students and potentially profiting off the data obtained from these misled students. In response to these allegations, the FTC issued a warning letter to Frank suggesting that the company may have misled students about acquiring relief funds related to the coronavirus. One financial aid expert said, and I quote, their assertion that the FAFSA could be completed in four or five minutes wasn't entirely accurate. It was somewhat quicker since they omitted questions from the FAFSA, but the problem is those questions are crucial for some college-bound students. But none of this affected Charlie, her company, or her pitches to investors, who were still interested in getting to know more and investing their money in the company, or consumers using

Frank. Actually, quite the opposite. At the start of 2021, Frank's website stated that its user base had now reached a staggering 4.26 million students. Charlie was now only 28 years old and had raised 20 million dollars in funding for Frank. So Charlie approached J.P. Morgan, who I'm just going to refer to as JMPC now moving forward. She approached them in the summer of 2021. At an initial meeting in July of 2021, Charlie told JPMC that Frank had significant engagement with college-aged students, a market segment that JPMorgan

wanted to grow. Charlie stated that Frank had 4.25 million users, defining a user as an individual who created a Frank account by entering a first name, last name, email address, and phone number on the Frank website. She distinguished these users from website visitors, representing to the J.P. Morgan diligence team that since 2017, Frank had more than 35 million visitors to its website. Charlie brought all of the documentation that she had to back this up in this meeting. She included a spreadsheet with a column labeled FAFSA in process, showing that 4.265 million students had started a FAFSA form with Frank, which of course required creating an online account with Frank. And she also showed that more than 2.1 million students fully completed the FAFSA form

through Frank. She went through all of the nitty-gritty details. She worked hard to persuade J.P. Morgan to see Frank like she did and like the investors did, explaining every question that they had and anticipating the next one. Based on the July 21st meeting and the documentation that she brought with her, J.P. Morgan confirmed Frank's definition of its customers and users who created a Frank account. After reviewing the details further, J.P. Morgan agreed to explore a potential acquisition. Then Charlie was offered a deal that would change her life as she knew it. J.P. Morgan was interested in Frank and wanted their company to build stronger connections with students and their

families by acquiring it. At that time, Frank was estimated to be able to reach over 4 million students across 6,000 different educational institutions very, very quickly. Part of the deal was that Frank would keep its branding and Charlie would now work at J.P. Morgan as head of student solutions in J.P. Morgan's digital products teams. And Charlie was ecstatic by this. This was the goal that she always had dreamed of, and now it was finally happening, and she was about to have a major payday. J.P. Morgan wanted to buy Frank for $175 million. Of course, with a company such as J.P. Morgan, they weren't going to just take Charlie's word for everything that she had said at that earlier meeting and then shell out $175 million.

So during the due diligence process regarding Charlie's claim of the 4.26 million customer accounts, J.P. Morgan asked Charlie for a detailed list of Frank's accounts. This list was to include crucial data such as first names, last names, dates of birth, phone numbers, mailing addresses, and email addresses. J.P. Morgan specifically asked the following questions to Charlie. How many customer accounts have 100% of the below data? How many customer accounts have partial information? And of partial records, what percent include each data field below. JP Morgan told Charlie that these were critical details that needed to be confirmed due to diligence requests and that they were necessary for proceeding with the acquisition of Frank, which is no big deal and totally reasonable. But there was only one teeny, teeny, tiny little

problem. Frank didn't have over 4 million customers, and there was no way that Charlie was going to be able to comply with this. And the lid was about to be blown off Charlie's entire scheme. Charlie initially refused to turn over the customer data, claiming that she couldn't do that because of the sensitive nature and privacy concerns for the customers and their data, especially if the deal fell through. Now J.P. Morgan would have all of her business's information. But that wasn't the real reason. A good excuse, yes, but not the real reason. Charlie had previously gone through negotiations with another company before J.P. Morgan. When they saw Frank's actual numbers, they backed out of the deal completely. J.P. Morgan agreed to have a third party validate the customer list and the information

so that Charlie wouldn't have any of these privacy concerns that she was claiming to have. So now the ball was back in Charlie's court, and it was all up to Charlie. She had a choice. Either tell the truth and risk losing the deal, or get as many customers as quickly as possible to reach 4.26 million. And she had balls and she chose the latter. The only problem now was there was quite literally no way in hell for her to do that because the real number of customers was less than 300,000. Yes, she was claiming 4.26 million customers and in reality she had less than 300,000. So she was going to

have to make up fake information, fake data accounts, fake customer accounts for millions and millions of users that also had to be vetted all in order to get this deal to push through. It is insane. And let me just say if getting real customers was that easy and was possible to begin with, then she wouldn't be in this predicament in the first place. So Charlie concocted a plan. Charlie and her chief growth officer, Oliver Amar, initially approached Frank's director of engineering. They did this to generate fabricated customer details using synthetic data produced by computer algorithms. Feeling uneasy by this, the engineer

questioned Charlie and Oliver about the legality of this request. Charlie tried to convince the engineer that she wasn't asking him to participate in any illegal activity. However, the engineer wasn't convinced and chose not to participate in this scheme, instead offering to provide Charlie with Frank's actual customer account list, which like I just said, amounted to fewer than 300,000 accounts as of July 31st, 2021. Charlie didn't take no for an answer. She just needed someone else now. So Charlie sought help from a data science professor at a college in the New York City

area who promoted his creative solutions to data related issues Charlie handed over a list of a little over 290,000 individuals who had initiated or submitted a FAFSA application through Frank she then had the professor generate 4.265 million customer names email addresses birthdays and other personal details based on the list that Charlie provided. And Charlie and this professor also went over their plan via email with each other. Their goal was to sample first names and last names independently and then ensure none of the sample names were real. For their addresses, the professor told Charlie that he couldn't find

addresses in his files and asked if he should make them up. Charlie said that's fine, but she wouldn't want the street to not exist in the state. But the professor figured out that creating real addresses may not be doable because the addresses he was getting from the white pages from whitepages.com had missing fields. So Charlie just said, okay, well, if we can't do real addresses, what's the best we can do? And they found another way. Whenever the professor reviewed all of the fake data that he made up, he noticed that it might be suspicious that some of the customers were living, attending high school, and attending college all in the same town and state.

Even telling Charlie, look, this would look really fishy to me if I was auditing this. But Charlie was apprehensive about the email addresses. She asked the professor if the email addresses looked real with an eye check or if it would be better to use a unique ID. And he said, yeah, they will look fake. So they decided to create a unique email for all 4.26 million fake customers. The professor also had trouble adding certain college names to the list, so Charlie suggested a perfect workaround of sorts, randomly assigning a college within the same state. He also told Charlie that the initial data she gave him had the same phone number listed for 676 people charlie just said he needed to

double check that the duplication wasn't more than five to seven percent so somehow some way the professor created a list of 4.265 million fake customers all with fake information and she sent that list over to a third-party vendor who would validate the list. While Charlie was working on this fake list, her CGO Oliver was busy reaching out to ASL Marketing. This is a marketing firm that claims to have the most comprehensive and accurate and responsive data of high school students, college students, and young adults that's available anywhere. So Oliver purchased a list of 4.5 million students for $105,000. But it was too late to use that information now since Charlie had already submitted that list to the third party for vetting. Until then, Charlie would just have to wait and see if her plan worked

and if she could pull off tricking this third-party vendor into validating her list. And get this, guys. Somehow, it worked. I don't know how, but it worked. And as soon as Charlie got the news that the third party validated the list, Charlie told the professor to destroy the list and not give J.P. Morgan anything else. And that was the end of it. The professor sent Charlie an invoice for $13,000 for his work and included the line items for every data point he created, like names, emails, birthdays, etc.

And Charlie immediately sent it back, said to resend it for $18,000, and said, just put data analysis on the invoice. And the professor did that. Now I know what Charlie did was highly illegal but you kind of have to laugh that the professor sent an invoice with the line items of what he helped create in their fake customer list. You know Charlie had to be like uh you literal imbecile why the hell would you give me an invoice for the description of the crimes that we just committed and I think that's why she sent it back with a higher amount kind of like paying him off being like oh no no I'm not going to pay 13 grand I'm going to pay 18 grand but change the description to just data analysis let's not

outline the crimes itself now although that might be the pot calling the kettle black because how smart was she to be emailing back and forth with the plans also it's like now you covered it up in the invoice but what about all of the digital documentation of you guys emailing back and forth to hatch the plan in the first place but whatever to each their own so shortly after this third party vendor finished their validation process and with jp morgan now happy they were ready to move forward with the deal with this acquisition. After signing the merger agreement, Charlie called the data science professor again. This time, she wanted him to cooperate with another third-party vendor called Information with an E, and she wanted to do this to secure more email addresses to supplement the ASL list that Oliver had purchased. Charlie decided to buy this additional email data knowing full well that JP Morgan had always planned to market its products and services to both existing Frank users

and future student accounts. She also knew that after closing, JP Morgan would request the Frank customer data file and she was more than willing to make that happen. So finally, September 14th, 2021, JPMorgan officially closed on the deal to buy Frank. And Charlie and the CGO Oliver Amar would now be employees at JPMorgan. So it's funny because when I told my mom the news, she said, of course JPMorgan bought Frank. You said they would be your number one when you started the company. And what really attracted me, honestly, was the people. I started this company and one of my favorite parts of the job is working with amazing people from all different backgrounds.

And what was truly amazing was the leadership to daily managers. Everyone just had such different perspectives. I probably met one or two men in the process. The bank is run by two really fantastic women and a lot of the leadership is just so inspiring. So that really was what drove me to make that decision. And from a secondary perspective, I believe Chase is at least the largest bank in the U.S. serving over 60 million customers in the States, which is just

huge. And so I could not think of a better platform to accelerate our impact, multiply it, and really get to the next level in terms of helping students get better access to college in the U.S. Jamie Dimon declared last year he planned to the next level in terms of helping students get better access to college in the U.S. Jamie Dimon declared last year he planned to get more aggressive in seeking takeovers, and he certainly made good on that promise with J.P. Morgan buying another financial startup. This time it's college financial planning platform. Frank, CNBC.com's Hugh Sun has the exclusive details on the story, and he joins us now. Hugh, why this deal?

The short answer is what they're getting is a software platform that's been pretty effective at serving young people who are heading to college and need to try to pay for it. So it's got a bunch of tools. The biggest, I think the main tool is an automated service that helps students apply for federal aid. And so it's got that. It's also got a platform where they can, you know, apply for discounted college courses, scholarships, negotiate their federal aid that they've gotten and other things.

So basically, you know, what they've got is, you know, this tool that has grown a pretty good user base. It's got 5 million users. And, you know, J.P. Morgan wants to get in on that. They want to basically have an affinity program, essentially, that, you know, as you're thinking about attending college, you've got to chase, you know, if all goes according to plan, you've got to chase bank account.

And after that, you know, if you graduate, perhaps you're going to add a credit card, mortgage, and auto. So this is their play to sort of get people hooked into the Chase ecosystem at an early age. Which may explain why they see so much value, potential lifetime value here for what otherwise would be a smallish size transition, transition transaction. Same for the one that they did with the Gats the other day. Should we expect bigger moves, things that would really move the needle? Which as a side note, I have no idea why that reporter was having such trouble with her words that day. So Charlie wrote this on her LinkedIn account. It's not every day that an entrepreneur

gets her fairy tale new beginning, not ending. For me personally, I will continue to lead Frank as part of the JPMorgan Chase team as managing director and head of student solutions. It feels full circle as I think about how years ago I opened my first checking account with Chase as I went off to college. And now, 10 years later, with Chase credit cards, mortgage, investment, and business accounts in hand, here I am, Frank, a JPMC company. I could not have reached this milestone without my amazing team, board members, investors, and favorite partners. What binds us together is still very much our shared values of doing the right thing. Charlie and Oliver weren't worried that they had submitted a fake list to this third-party vendor because their

plan was to use the list that Oliver had purchased of fake list to this third-party vendor because their plan was to use the list that Oliver had purchased of the most comprehensive and accurate and responsive data of high school and college students and young adults available anywhere for $105,000. That list, along with the new list that Charlie bought. Almost four months after the deal closed in January of 2022, JPMorgan wanted that customer data list. Charlie and Oliver had swapped out the fake list with this new list from the ASL and from that company Mformation with an E. For them, now there was no problem. There was no harm, no foul. They were getting a legit list now. Frank got its $175 million investment, and Charlie would still be running Frank and could

fix everything. Of the $175 million, Charlie received $21 million in direct proceeds, and she moved to Miami Beach, Florida. In her employment agreement, she bargained for an additional $20 million in retention bonus, and that was payable if she remained employed with J.P. Morgan through the vesting dates and complied with J.P. Morgan's code of conduct. Oliver received $5 million in direct proceeds. In his employment agreement, he bargained for a retention bonus of $3 million. They knew that Frank would keep growing and that J.P. Morgan wouldn't notice, or so they had naively hoped. They never imagined that all hell was about to break loose. I wasn't able to find out exactly when JP Morgan was going to move

forward with their marketing campaign with the Franks client list, but it was after January and before June of 2022. Unsurprisingly, the result of the marketing test campaigns were a complete and utter disaster. JPMorgan sent marketing test emails to what they believed were 400,000 unique Frank customers. Of the individuals contacted, only 28% of emails were delivered, compared to a 99% delivery rate that they usually see with similar campaigns. Just 1.1% of the delivered emails were open compared to 30% for a typical JP Morgan campaign. So after this, they immediately knew that something was wrong and they started investigating. Oliver was fired on October 26th 2022 and Charlie was

2022. J. P. Morgan had ju into buying a company for and now they were going t earth on these two frauds Morgan buys the company. They buy Frank, believing it had over 4 million users based on the list that they received from her and her company. Then after they bought it for $175 million, they find out the actual number of customers

never even exceeded 300,000. How in the world does this happen? How does JPM P. Morgan, r smartest global investmen not figure this out befor large in a lawsuit they f and the company frank in They made the following c

a small startup business seemingly had the potent to grow and become a successful enterprise in the future and appeared to have had an early proven success rate. But to cash in, Charlie decided to lie, including lying about Frank's success, Frank's size, and the depth of Frank's market penetration, all in order to induce J.P. Morgan to purchase Frank for 175 million dollars. Then when JP Morgan specifically requested proof of that claim during due diligence, Charlie used synthetic data techniques to create a list of 4.265 million fake customers. A list of names, addresses, dates of birth, and other personal information for 4.26 million students who actually did not exist. In reality, Frank was nearly 4 million users short. After the unusually poor returns from the marketing campaign, J.P. Morgan reviewed various aspects of Frank's business. As a result of its review, J.P. Morgan

discovered the fake customer list and the ASL list. J.P. Morgan has compared those lists to Frank's actual customer list and examined emails, messages, and chats among Charlie, the data science professor, and Oliver. Those documents leave no doubt the fake customer list and the ASL list did not contain the first name, last name, address, and phone number for actual Frank customers. Frank files and data do not include any list or database of 4.265 million real students who actually used Frank to start a FAFSA form. That list does not exist. In every aspect of her interactions with JP Morgan, Charlie had a choice between revealing the truth about her startup and accepting Frank's actual value and lying to inflate Frank's value and reaping the rewards from that inflation. Charlie chose each time to lie and the evidence shows that time and time again,

she layered fraud upon fraud to deceive J.P. Morgan. They also go on to list all of Charlie's public tweets. On January 17, 2021, she tweeted, We put students first, and over 4.25 million students trust Frank for financial aid help. On February 1, 2021, she tweeted, we're working on it at Frank. 4.25 million students down, 10 million more to go. The next day on February 2nd, 2021, she tweeted, because schools don't teach it, we've engaged over 4 million students on how to pay for college. A week later, on February 10th, 2021, she tweeted,

Fill out your FAFSA form for free from your phone in an average of five minutes. Over 4 million students trust Frank to help navigate financial aid. On February 16th, she tweeted, When academics tell us Frank is not the answer, all good. 4 million plus students think we are. Then on May 8th, 2021, another tweet reading, super proud of the team at Frank and thankful for the five million plus families who trust us every day. On June 21st, 2021, a tweet that reads, should have it up and running for the six million

plus families we serve for next FAFSA form opening. They also listed archived versions of Frank's website from July 8th, July 26th, July 31st, August 11th, and August 13th of 2021, where it was advertising why 4.25 million students chose Frank. Also, quick and easy apply for Aid in Under 7 Minutes, and Safe and Secure Bank Level Security, also Human Support, Happy People Always. Additionally, J.P. Morgan also included charts that Charlie used during initial presentations, showcasing very clearly that she was saying she had over 4 million users. When Charlie and Oliver initially approached the director of engineering for making a fake list and he questioned whether creating and using such a

data set was legal, Charlie said that she did not believe that anyone would end up in a orange jumpsuit over this project. Then the lawsuit went into emails that they found between Charlie and the data professor, which I referenced earlier, and they even found the original invoice that he sent Charlie for that time that he spent making up customer data and performing these college major generations and generation of all features except for the financials, while creating the first names, last names, emails, phone numbers, and looking into white pages. Remember, all of the line item data in the invoice. The lawsuit also went into how they first suspected that something

was off, saying J.P. Morgan first noticed irregularities with the list when a J.P. Morgan employee observed that the list contained exactly 1,048,576 rows, which is the maximum permitted by Microsoft Excel. That number also did not correspond to any number of customer accounts previously identified by Charlie or others at Frank for any given time period. J.P. Morgan raised this issue with individuals at Frank. A member of the marketing team at J.P.organ wrote an email to Charlie and another Frank employee, stating, and I quote, I can also confirm that there are 1,048,575 records, plus the header row. One observation, that is the maximum number of rows allowed in Microsoft Excel. Can we be sure that this is just a coincidence?

Or maybe there is some data hidden after that row? On January 24th, 2021, a Frank engineer responded to this Chase retail marketing team member stating that we looked into the issue with the first file that we sent. The marketing team wanted me to upload another file for you. From what I understand, this file is additive to the previous file. These are our FAFSA application specific users. And this additive file contained the significantly smaller population data for approximately 135,000 individuals. Then they say, in June of 2022, J.P. Morgan conducted a comprehensive investigation into Frank and the merger. That investigation revealed the facts

alleged in this complaint. J.P. Morgan has all of the emails showing the fraud that Charlie and Oliver used Frank's email accounts to create the fake customer list, and email accounts now belong to J.P. Morgan following the merger. The bank closed Frank in January of 2023, and Chief Executive Jamie Dimon of J.P. Morgan has called the acquisition a huge mistake. Which, no shit it was a huge mistake, but it gets even weirder, guys. Charlie's lawyer, Alex Spiro, who also represents Elon Musk and Mick Jagger, called the lawsuit against Charlie nothing but a cover, and said that JP Morgan was just trying to retrade the deal, and now she is countersuing them. In a countersuit filed against JP Morgan in February of 2023, her attorneys accused the bank of a massive cover-your-ass effort designed to shift

the blame for a failed and now regretted acquisition to someone that they view as an easy target, its young female founder. Also part of the counterclaim, Charlie says that JPMorgan compromised her reputation and wrongfully withheld nearly $28 million in retention payments and in equity. Charlie has also denied the bank's accusations and said that it cannot prove its outlandish claims. Charlie insists she didn't pull the wool over the bank's eyes. In her view, the accusations against her

are simply payback for the bank's own blunder of shelling out too much for something they can't put to good use, or technology and data they simply don't understand. In her counterclaim against the bank filed back in February, she describes herself as an outsider whose youth and lack of institutional longevity made her an easy target. And in a shocking twist, Charlie isn't arguing that the data was fake. Instead, she says that a Chase executive asked her to fabricate the data, and so she did, and just complied with that. What they've spelled out in their complaint, basically, they claim Charlie said during the acquisition process,

hey, we have over 4 million users. Users meaning someone who gave Frank their email, their phone number, their name. Then they buy the company, they find out, oh, no, their name. Then they buy the company. They find out, oh, no, you actually only have 300,000 users. But Charlie says that they're conflating users with user signups. So she claims that she was always clear that only 300,000 people had actually given Frank their emails and that the 4.25 number was basically web traffic.

How this didn't come up in due diligence. Well, you know, that's that's for regulators to figure out. OK, so let's say JP Morgan is right. Let's say the SEC is right. How do they think she did this? Was the whole company corrupt? So there's actually not that much dispute over at a certain point during due diligence, Charlie hands JP Morgan a list of the supposed 4.2 million users. Right. And everyone agrees that that list was fake. It's a question of how you justify why it was fake. So JP Morgan says, well, it was a fake list because she never had 4.25 million users. And Charlie Javis says, well, it was fake because I was using synthetic data. I could not give you my existing customers personal information.

So I was using algorithmically generated fake data designed to closely resemble the actual data. So you could analyze the demographic characteristics of the customer base, the potential customer base, without actually betraying the privacy of any people who had actually signed up. So I'm amazed by this in the same way that I'm amazed by Elizabeth Holmes, that someone could have the ability to pull something like this off. JPMorgan says, you know, there were red flags, but there's other people who said there were red flags in this woman's history for years and years that should have tipped people off. She's up to no good. What can you tell us about that? There were definitely some red flags.

So at a certain point when Frank first launched, they had the term FAFSA in their URL. FAFSA meaning the Free Application for Federal Student Aid. That is trademarked by the Department of Education. And so the DOE reached out and was like, you know, there's reasonable concern that students could be confused that you're an affiliate of ours. So she had to sort that out and remove FAFSA from the URL. There was another situation where four members of Congress wrote to the FTC saying that they'd heard Frank was offering assistance with helping students apply for federal, for pandemic relief. And they claimed that Frank was misrepresenting exactly what students stood to gain from using their service.

They claimed there were no fees. Turns out there maybe were some fees and so on. And so then the FTC issued a warning saying, hey, you got to cut that out. You got to fix the website. And so that was settled. And the FTC one was definitely public before the acquisition. Sam Bankman-Fried, Elizabeth Holmes. that was settled. And the FTC one was definitely public before the acquisition. 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 April of 2023, Charlie was arrested on federal

fraud charges, and she is now currently facing one count of conspiracy to commit bank and wire fraud, one count of wire fraud affecting a financial institution, and one count of bank fraud, each of which carry a maximum sentence of 30 years in federal prison. And one count of securities fraud, which carries a maximum sentence of 20 years in federal prison. She was released on a $2 million bond. And Charlie, if you find yourself listening to this, hello. And also, what the hell were you thinking, girl? Come on, girlfriend, get with it. A complaint was also filed against her by the SEC. The director of the SEC enforcement division said that this is old school fraud and they want her to be barred from leading a public company and be forced to pay back the money that she received. In May of 2023, a grand jury indictment in Manhattan federal court charged her with the fraud charges and the conspiracy charge as well that she was arrested for. It also seeks the

forfeiture of millions of dollars from her accounts. Charlie has pled not guilty to all charges. U.S. Attorney Damian Williams said, and I quote, as alleged, Charlie engaged in a brazen scheme to defraud J.P. Morgan in the course of a $175 million acquisition deal. She lied directly to J.P. Morgan and fabricated data to support these lies, all in order to make over 45 million dollars from the sale of her company. This arrest should warn entrepreneurs who lie to advance their businesses that their lies will catch up to them, and this office will hold them accountable for putting their greed above the law. That is a very true statement. Cough, cough, Anna Delvey. Cough, cough, Elizabeth Holmes.

All of these women who are just, like, lying to try to bankroll a lavish lifestyle, which I kind of feel like Elizabeth Holmes truly did believe that what she was doing would work out, but, I mean, that's a tale for another day. Charlie was recently in court in New York on June 6th, 2023, and Charlie's lawyer, Alex Spiro, argued in a court filing that the Justice Department has tactically requested the court to pause the SEC's civil suit to let the criminal case progress first. He claims that this move is designed to gain an upper hand in the criminal case, saying this allows the SEC and the prosecutor to play games with Charlie while she

battles to protect her freedom and career, that it robs her of a fair shot to defend herself promptly in both cases. According to the filing, the SEC requested the court for more time to hand over documents that Charlie claims are crucial to her defense. So here's the big question here. Is this all just one enormous mix-up and a scorned billionaire CEO wanting to find a scapegoat? Or did Charlie, a young entrepreneur, manage to pull a huge fast one on JP Morgan, arguably the biggest banking titan in the United States? What's the truth here? If you guys are watching this on YouTube, I want to know what you guys think. So leave it in the comments. And if you're listening to this on Spotify, I'm going to put up a poll. So make sure you vote on the Spotify poll as well,

because I really want to know what you guys think about this. It is just wild to me that she's counter suing and saying no, no, no, you guys told me to do this. It's like that is a pretty ballsy move. So let me know what you guys think and what do this it's like that is a pretty ballsy move so let me know what you guys think and what your opinion is in the comments I don't know why but cases like this one and the Anna Delvey case and so many others and like Dirty John they fascinate me so much anytime there's like a con woman a con man anything like that I just get so fascinated by it I think for the same reason that I get fascinated by cults because it's like I'm just so curious as to how these people have the ability

to brainwash to manipulate people and kind of curious as to how they have the balls to do it too now while this one didn't end in murder thank god so many of them do like Dirty John which I'm sure everybody has heard about that case at that at this point and that actually happened right in my backyard Newport Beach it's just unbelievable so I'm curious too do those cases fascinate you because I definitely will do more of them not only here on the podcast but over on my YouTube channel 10 to life because for some reason I can't get enough of cults and cons like con women con men I just can't get enough so if that's something that you guys want more of let me know via the comments because I always like diving into that stuff thanks for tuning into another episode of serialously with me I have

some very very exciting news coming up for you guys so make sure to be checking back for that also over on youtube we are almost at 1 million subscribers I can't believe it I'm going to be checking back for that. Also over on YouTube, we are almost at 1 million subscribers. I can't believe it. I'm going to be doing a massive, massive giveaway when we hit that, but I do have some other exciting news coming up. So make sure that you check back for that. Please don't forget before you close your podcast app,

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So please, thank you in advance for all of you who leave those reviews. I greatly appreciate it. So I will be back with you next week for a brand new wild ass true crime case besties. But I actually might even be back before then with a bonus episode. But I guess you will have to wait and see so make sure that you are following the podcast so that you get notified of those bonus episodes all right besties thank you for tuning in today again with me for another wild true crime case I will be talking with you very very soon all right thanks again this is your true crime bestie signing off. Have a great rest of your week. Bye.