Joanna Smith-Griffin, the 33-year-old founder of AllHere Education, an AI startup focused on reducing student absenteeism, has been arrested and charged with defrauding investors of nearly $10 million. Federal prosecutors allege that Smith-Griffin misrepresented the company’s revenue and customer base to secure substantial investments. According to the indictment, Smith-Griffin claimed AllHere had lucrative contracts with major school districts such as New York City and Atlanta, when in reality, the company generated only $11,000 in revenue the year before its funding efforts.
This contrasts with the $3.7 million Smith-Griffin reported to investors. Once AllHere’s valuation climbed, Smith-Griffin allegedly sold some of her stake in the company and spent hundreds of thousands of dollars on personal expenses, including a down payment on a new home and her wedding. Prosecutors also accuse her of creating a fake financial consultant identity to issue false documents to investors.
Smith-Griffin, a Harvard graduate and former teacher, was praised for her work in developing an AI chatbot to tackle student absenteeism.
Founder arrested for investor fraud
AllHere attracted high-profile attention, including that of Los Angeles Unified School District (LAUSD) Superintendent Alberto Carvalho.
LAUSD, AllHere’s biggest customer, expressed shock and disappointment at the allegations. Earlier this year, AllHere furloughed its staff and entered bankruptcy proceedings amidst financial turmoil. Former CTO Toby Jackson testified during the proceedings but could not clarify several questionable transactions, including $243,000 paid to Smith-Griffin for travel expenses.
Smith-Griffin faces charges of wire fraud, securities fraud, and aggravated identity theft, with a potential sentence of up to 42 years in prison if convicted. Her arrest took place on November 19 at her home in Raleigh, North Carolina. US Attorney Damian Williams emphasized the importance of accountability in financial representations, stating, “The law does not turn a blind eye to those who allegedly distort financial realities for personal gain.”
The case against Smith-Griffin highlights the scrutiny faced by young entrepreneurs who gain significant attention and investment, raising concerns about the proper utilization of AI in schools and the management of investor funds by educational technology companies.
