Joanna Smith-Griffin, the 33-year-old founder of an AI education startup called AllHere Education, was arrested Tuesday in North Carolina and charged with securities fraud, wire fraud, and aggravated identity theft. Prosecutors allege that Smith-Griffin misrepresented AllHere’s revenue, customer base, and cash to investors from about November 2020 to June 2024. According to the indictment, Smith-Griffin told potential investors in the spring of 2021 that AllHere had generated about $3.7 million in revenue in 2020, had around $2.5 million in cash on hand, and had major school district customers such as the New York City Department of Education and Atlanta Public Schools.
In reality, AllHere had generated about $11,000 in revenue in 2020, had about $494,000 in cash, and did not have contracts with many of the customers it claimed. Despite the company’s financial troubles, Smith-Griffin was able to obtain nearly $10 million from investors and sought an additional $35 million from a private equity investor, who ultimately decided not to invest. Prosecutors also allege that Smith-Griffin used some of the fraudulently obtained funds to put a down payment on a house in North Carolina and pay for her wedding.
Founder arrested for education fraud
When AllHere’s investors and outside accountant discovered the discrepancy between the company’s actual financials and what Smith-Griffin was telling investors, she allegedly tried to cover up her actions by creating a fake email account for AllHere’s outside financial consultant, which she used to send additional fraudulent financial documents to her largest investor. AllHere created the “Ed” chatbot, which was used by big school districts, including the Los Angeles Unified School District (LAUSD).
However, the company is now in Chapter 7 bankruptcy, its employees have been laid off, and it is under the control of a court-appointed bankruptcy trustee. FBI Assistant Director in Charge James E. Dennehy said, “Her alleged actions impacted the potential for improved learning environments across major school districts by selfishly prioritizing personal expenses.
The FBI will ensure that any individual exploiting the promise of educational opportunities for our city’s children will be taught a lesson.”
Smith-Griffin faces more than 40 years in prison if convicted on all charges. The aggravated identity theft charge alone carries a mandatory two-year sentence.
