AllHere Education Inc. founder Joanna Smith-Griffin was charged with securities fraud, wire fraud and identity theft.Smith-Griffin is accused of getting nearly $10 million from investors and using some of the money to pay for her home and to finance her wedding.Prosecutors say Smith-Griffin lied to investors about AllHere Education’s revenue and the number of clients the company worked with.
The founder of an artificial intelligence startup, promoted to strengthen communication between school districts and families, has been arrested on charges of defrauding investors.
Joanna Smith-Griffin, the founder and CEO of AllHere Education, Inc., was arrested in North Carolina on Tuesday on charges of securities fraud, wire fraud and identity theft, according to a news release from the Southern District of New York U.S. Attorney’s Office.
An indictment unsealed on Tuesday alleges that Smith-Griffin lied to potential investors about the revenue that AllHere Education generated and the number of school districts the startup had contracts with over the last few years.
In total, prosecutors allege in the indictment, Smith-Griffin fraudulently obtained nearly $10 million from AllHere Education investors, transferring at least $600,000 to her personal bank account, and using some of the money to pay for a home down payment and to finance her wedding.
No attorney was listed for Smith-Griffin in court records. USA TODAY emailed AllHere Education but had not heard back by Wednesday evening.
All of AllHere Education’s employees had been laid off and the company was under control of a court-appointed bankruptcy trustee as of Tuesday, according to the office of Southern District of New York U.S. Attorney Damian Williams.
In November 2020, prosecutors allege that AllHere told investors that the company generated $3.7 million in revenue that year, when in fact the real figure was more like $11,000, the indictment says.
During a fundraising campaign to raise $8 million from investors, Smith-Griffin told them that AllHere Education worked with eight educational institutions: the New York City Department of Education, Atlantic Public Schools, Boston Public Schools, Baltimore County Public Schools, Prince George’s County Public Schools, Durham Public Schools, Grand Rapids Public Schools and the Bureau of Indian Education, according to the indictment.
In reality, only Boston Public Schools and Prince George’s County Public Schools had contractual relationships with AllHere Education, the indictment says.
Prosecutors detail how alleged fraud scheme worked
Prosecutors say that Smith-Griffin used the name of an external consultant to communicate with investors and AllHere Education’s board of directors about a financial report discrepancy.
According to the indictment, Smith-Griffin used an AllHere Education email account with an external consultant’s name to inform investors and the board of directors about the company’s revenue, number of contracts with school districts and payments made by customers. It was all false and the real external consultant was unaware Smith-Griffin used her likeness until a board member mentioned it, the indictment says.
In the days following Smith-Griffin’s allegedly fake emails, the company’s board of directors removed her from access to the AllHere Education bank and corporate accounts, the indictment says. Smith-Griffin was also terminated as CEO.
In June of this year, AllHere Education furloughed the majority of its employees and in August, the company filed for Chapter 7 bankruptcy, which permits the liquidation of assets.
What was AllHere Education?
Smith-Griffin founded AllHere Education, Inc. in 2016. The company was known for its use of an artificial intelligence chatbot to interact with students and families.
Around 2023, AllHere entered in a multi-million dollar contract with the Los Angeles Unified School District in California to develop an artificial chatbot named “Ed,” according to the indictment. Ed used generative artificial intelligence to direct students to resources and assignments and provide encouraging feedback.
“The indictment and the allegations represent, if true, a disturbing and disappointing house of cards that deceived and victimized many across the country,” a Los Angeles Unified School District spokesperson told USA TODAY via email. “We will continue to assert and protect our rights.”
In 2021, Smith-Griffin was named a Forbes 30 Under 30 Award recipient in Education and this year, she was included in Inc.’s Female Founders 250 list.
Greta Cross is a national trending reporter at USA TODAY. Follow her on X and Instagram @gretalcross. Story idea? Email her at gcross@gannett.com.