The founder of an AI startup once featured on Forbes’ “30 Under 30” list was charged Tuesday with defrauding investors.
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Joanna Smith-Griffin, 33, who founded AllHere Education, was arrested in North Carolina and charged with securities fraud, wire fraud, and identity theft.
U.S. Attorney Damian Williams of the Southern District of New York claimed that “Smith-Griffin orchestrated a deliberate and calculated scheme to deceive investors in AllHere Education, Inc., inflating the company’s financials to secure millions of dollars under false pretenses. The law does not turn a blind eye to those who allegedly distort financial realities for personal gain.”
Prosecutors claimed that Smith-Griffin lied to investors, telling them she had millions in revenue that didn’t exist and claimed to have contracts with major school districts like the New York City Department of Education that didn’t exist.
AllHere created the “Ed” chatbot, which was eventually used by big school districts, including the Los Angeles Unified School District. On its website, LA schools said “Ed” is an “educational friend designed to help students reach their limitless potential,” and used student data to create individual learning plans for students.
Prosecutors also allege that Smith-Griffin “embezzled corporate funds for her own benefit,” including putting a downpayment on her house and paying for her wedding.
AllHere collapsed before the charges were filed, filing Chapter 7 bankruptcy and laying off workers. It is currently being controlled by a court-appointed bankruptcy trustee.
Her combined charges carry more than 40 years of potential incarceration. The aggravated identity theft charge has a mandatory two-year sentence.
FBI Assistant Director in Charge James E. Dennehy said in a statement that Smith-Griffin’s alleged actions “impacted the potential for improved learning environments across major school districts by selfishly prioritizing personal expenses.”
“The FBI will ensure that any individual exploiting the promise of educational opportunities for our city’s children will be taught a lesson,” Dennehy added.
Ben Kesslen writes for Quartz, which like the Root, is owned by G/O media
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