Joanna Smith-Griffin, the 33-year-old founder of AI startup AllHere Education, has been arrested and charged with defrauding investors of nearly $10 million. According to the indictment, Smith-Griffin misrepresented her company’s revenue and customer base over the years to fraudulently raise funds. She allegedly claimed that some of the largest school districts in the country, including New York City’s, were her customers, which turned out to be false.
As AllHere Education’s valuation increased, Smith-Griffin sold part of her stake and spent hundreds of thousands of dollars on personal expenses, such as a down payment for a new home and her wedding. The F.B.I. arrested Smith-Griffin on Tuesday in North Carolina, where she resides. She faces charges of wire fraud, securities fraud, and aggravated identity theft, which could result in a prison sentence exceeding 40 years.
Startup founder charged with fraud
James E. Dennehy, the F.B.I. assistant director in New York overseeing the investigation, said, “Her alleged actions impacted the potential for improved learning environments across major school districts by selfishly prioritizing personal expenses.
The F.B.I. will ensure that any individual exploiting the promise of educational opportunities for our city’s children will be taught a lesson.”
AllHere Education, which aimed to use artificial intelligence to boost student and parent engagement and reduce absenteeism, is currently undergoing bankruptcy proceedings, and all employees have been laid off. Smith-Griffin started the company in 2016 after graduating from Harvard Extension School and working as a teacher and charter school employee. She was celebrated on Forbes’ “30 Under 30” list in 2021 for her work in education technology.
The case highlights the importance of due diligence and transparency in the startup ecosystem, particularly among high-profile entrepreneurs. It also follows a pattern of young entrepreneurial figures celebrated by Forbes who later faced legal troubles, such as Sam Bankman-Fried, Charlie Javice, and Martin Shkreli.
