DOJ: Raleigh woman accused of bilking investors of millions spent money on house, wedding
.jpg "Joanna Smith-Griffin, the 33-year-old founder of AllHere Education, was charged Tuesday with securities fraud, wire fraud and aggravated identity theft.")
The founder and CEO of a now-bankrupt education tech startup was arrested Tuesday for lying to investors and embezzling company money for personal purchases.
U.S. prosecutors indicted Joanna Smith-Griffin of Raleigh for securities fraud, wire fraud, and aggravated identity theft, alleging she bilked investors out of millions of dollars through her startup AllHere Education, which promised to improve K-12 student engagement through an artificial intelligence platform.
Smith-Griffin, 33, formed AllHere in 2016 while studying at Harvard University. In 2021, she was named to Forbes’ 30 under 30 list for education, and more recently, her company entered a contract with the Los Angeles Unified School District to provide an AI chatbot to students in the nation’s second-largest school district.
The United States Attorney’s Office says Smith-Griffin misrepresented AllHere’s financials as early as November 2020 during its Series A funding round. According to the indictment, she told investors her Boston-based company had generated $3.7 million in 2020 and carried $2.5 million in cash reserves. In reality, AllHere made only $11,000 that year and had around $500,000 on hand.
Furthermore, Smith-Griffin informed early investors her startup had contracts with the New York City Department of Education and Atlanta Public Schools. It did not.
Over the next four years, prosecutors say Smith-Griffin continued to misrepresent the company’s revenue, cash reserves, and customer base — up until AllHere filed for bankruptcy this past June and laid off its entire staff. By then, she had obtained $10 million from investors.
Smith-Griffin is accused of using these corporate and fraudulently obtained funds on herself, including the down payment on her North Carolina house and her wedding.
“Her alleged actions impacted the potential for improved learning environments across major school districts by selfishly prioritizing personal expenses,” FBI assistant director in charge James Dennehy said in a statement. “The FBI will ensure that any individual exploiting the promise of educational opportunities for our city’s children will be taught a lesson.”
When investors uncovered discrepancies between AllHere’s actual financial records and what its CEO falsely claimed, prosecutors say Smith-Griffin acted to obscure her crimes. One step involved her creating a bogus email account through which she sent fraudulent documents to the company’s biggest investor.
Smith-Griffin was arrested and appeared in the Eastern District of North Carolina. Her case is being handled by the U.S. Attorney’s Office’s Securities and Commodities Fraud Task Force in the Southern District of New York.
Securities fraud and wire fraud each have a maximum prison sentence of 20 years while aggravated identity theft carries a mandatory sentence of two years in prison.
