The founder of an AI education technology business is accused of cheating investors out of $10 million by funding her extravagant lifestyle with fictitious contracts and false financial statements.#NorthCarolina #Raleigh, North Carolina #News #Crime
Raleigh, North CarolinaOnce praised for its creative strategy to increase classroom attendance, the North Carolina inventor of an artificial intelligence education startup is now facing significant federal charges. Joanna Smith-Griffin, 33, of Raleigh, is accused by prosecutors of cheating investors out of millions of dollars by making false statements about the financial success of her company. The startup is in ruins and its former employees are out of work as a result of the aftermath.
Misrepresentations That Led to Millions in Losses
Over a number of years, Smith-Griffin allegedly misrepresented AllHere Education, Inc.’s earnings, clientele, and financial stability, according to the U.S. Attorney’s Office for the Southern District of New York. The startup, which was founded at Harvard University, promised to increase student engagement by marketing artificial intelligence software to K–12 school systems.
The misrepresentations allegedly started during AllHere’s Series A investment round in November 2020, according to federal authorities. Smith-Griffin stated at the time that the business had $2.5 million in cash reserves and $3.7 million in revenue for 2020. She also boasted of having agreements with significant school districts, such as Atlanta Public Schools and the New York City Department of Education.
But the indictment shows wildly disparate numbers: Just $11,000 was AllHere’s real revenue in 2020, and the company had about $494,000 in cash on hand. Additionally, there were no purported agreements with well-known educational systems.
As a result of these untrue statements, Smith-Griffin was able to obtain about $10 million from investors when the business failed in 2024. She allegedly asked a private equity investor for an extra $35 million, but the investor eventually chose not to provide funding for the business.
Personal Expenses and Fraudulent Actions
Smith-Griffin is charged with utilizing a portion of the money that was obtained fraudulently for her own benefit, such as a down payment on a house in North Carolina and wedding-related costs.
Prosecutors claim AllHere took action to hide the crime when investors started noticing irregularities in her financial records. These included sending forged documents to the company’s biggest investor and setting up a phony email account for AllHere’s financial consultant.
AllHere filed for Chapter 7 bankruptcy as a result of the plan, which resulted in the termination of every employee. A court-appointed bankruptcy trustee is currently in charge of the business.
Legal Charges and Broader Implications
Smith-Griffin is charged with wire fraud and securities fraud, each of which carry maximum jail terms of 20 years. In addition, she faces a mandatory two-year prison sentence for aggravated identity theft.
According to FBI Assistant Director in Charge James E. Dennehy, the agency will make sure that anyone who takes advantage of the promise of educational possibilities for our city’s youngsters is taken to task. He underlined how the purported plan affected the advancement of education in significant school districts.
U.S. Attorney Damian Williams highlighted the case’s financial and societal ramifications by characterizing the accused activities as a purposeful and calculated scheme to defraud investors.
The indictment emphasizes how crucial accountability is in fields like education that are devoted to serving the public good. This case is a clear illustration of the legal hazards connected to fraudulent actions in the startup industry, with serious repercussions imminent.
Associated Topics: North Carolina Crime
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