North Carolina AI Startup Founder Accused in Shocking $10 Million Investor Fraud Scheme!
Founder of an AI ed-tech company charged with defrauding investors of $10M, using fake contracts and inflated financials to fund her lavish lifestyle. 🌐 #News #RaleighNC #NorthCarolina #Crime
RALEIGH, NC – The North Carolina founder of an artificial intelligence education company, once celebrated for its innovative approach to improving classroom attendance, now faces serious federal charges. Prosecutors allege Joanna Smith-Griffin, 33 of Raleigh, misled investors with false claims about her company’s financial success, ultimately defrauding them out of millions. The fallout has left the startup in ruins and its former employees without jobs.
Misrepresentations That Led to Millions in Losses
According to the U.S. Attorney’s Office for the Southern District of New York, Smith-Griffin misrepresented AllHere Education, Inc.’s revenue, customer base, and financial health over several years. Founded at Harvard University, the company marketed artificial intelligence software to K-12 school districts, promising to boost student engagement.
Federal prosecutors allege the misrepresentations began during AllHere’s Series A financing round in November 2020. At that time, Smith-Griffin claimed the company had generated $3.7 million in revenue for 2020 and had $2.5 million in cash reserves. She also boasted of contracts with major school districts, including the New York City Department of Education and Atlanta Public Schools.
However, the indictment reveals starkly different figures: AllHere’s actual 2020 revenue was just $11,000, and the company held approximately $494,000 in cash. The alleged contracts with prominent school districts also did not exist.
These false claims continued as the company collapsed in 2024, allowing Smith-Griffin to secure nearly $10 million from investors. She allegedly sought an additional $35 million from a private equity investor who ultimately decided not to fund the company.
Personal Expenses and Fraudulent Actions
Smith-Griffin is accused of using some of the fraudulently obtained funds for personal gain, including a down payment on a home in North Carolina and expenses related to her wedding.
As investors began uncovering discrepancies in AllHere’s financial records, prosecutors allege she took steps to conceal the fraud. These actions included creating a fake email account for AllHere’s financial consultant and sending falsified documents to the company’s largest investor.
As a result of the scheme, AllHere filed for Chapter 7 bankruptcy, leading to the layoff of all employees. The company is now under the control of a court-appointed bankruptcy trustee.
Legal Charges and Broader Implications
Smith-Griffin faces charges of securities fraud and wire fraud, each carrying potential sentences of up to 20 years in prison. She is also charged with aggravated identity theft, which includes a mandatory two-year prison sentence.
“The FBI will ensure that any individual exploiting the promise of educational opportunities for our city’s children will be taught a lesson,” said FBI Assistant Director in Charge James E. Dennehy. He emphasized the impact of the alleged scheme on educational improvements in major school districts.
U.S. Attorney Damian Williams described the alleged actions as “a deliberate and calculated scheme to deceive investors,” highlighting the financial and societal repercussions of the case.
The indictment underscores the importance of accountability in industries dedicated to public benefit, such as education. With significant consequences looming, this case serves as a stark example of the legal risks associated with fraudulent practices in the startup world.
RELATED TOPICS: Crime | North Carolina
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