Joanna Smith-Griffin Charged with Defrauding Investors of $10 Million in AllHere Education Fraud.

Joanna Smith-Griffin, 33, the founder and CEO of AllHere Education, Inc., was arrested in North Carolina on Tuesday, facing multiple charges of securities fraud, wire fraud, and identity theft. The indictment, made public on the same day, claims that Smith-Griffin misled investors about the financial success of her artificial intelligence startup, AllHere Education, which aimed to improve communication between school districts and families.

The Allegations Against Joanna Smith-Griffin

Smith-Griffin is accused of fabricating the revenue and the number of school districts working with AllHere Education to attract investors. The indictment alleges that she misrepresented the company's revenue, claiming $3.7 million in 2020 when the actual amount was only around $11,000. Additionally, she allegedly exaggerated partnerships with several school districts, including New York City and Boston Public Schools, when only a few formal agreements existed.

Prosecutors claim that Smith-Griffin defrauded investors of nearly $10 million. A portion of this money, approximately $600,000, was allegedly diverted to her personal account, where it was used for personal expenses, including a home down payment and wedding costs. The case has raised concerns about the integrity of AI-driven ventures in the education sector.

FBI Assistant Director in Charge James E. Dennehy commented: “Joanna Smith-Griffin allegedly misrepresented the composition of her startup company to defraud investors of millions and masqueraded as a financial consultant to perpetuate the scheme once discrepancies were discovered.  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.”

Fraudulent Communications and Misleading Investors

One of the key elements of the case involves Smith-Griffin impersonating an external consultant to mislead both investors and the board of AllHere Education. She is accused of using the consultant's identity and email to communicate false information about the company's financials and its relationships with school districts. The consultant was unaware of the deception until it was revealed by a board member.

Following the fraudulent communications, AllHere Education's board of directors took swift action, revoking Smith-Griffin's access to the company’s accounts and dismissing her as CEO.

Impact on AllHere Education and Its Employees

AllHere Education, which was founded in 2016 and gained recognition for its AI-powered chatbot used in schools, is now under the oversight of a bankruptcy trustee. In June, the company laid off a significant portion of its workforce, and by August, it filed for Chapter 7 bankruptcy to liquidate its assets.

Despite securing a high-profile contract with the Los Angeles Unified School District in 2023, the company's collapse was swift. The AI chatbot, “Ed,” developed by AllHere, used generative AI to assist students in finding resources and assignments. The contract with LAUSD has now come under scrutiny due to the allegations against Smith-Griffin.

Repercussions and Public Reaction

The allegations against Smith-Griffin have drawn widespread attention, particularly in the education and technology sectors. A spokesperson for Los Angeles Unified School District expressed disappointment, stating that the situation had "deceived and victimized many across the country" and emphasized their commitment to protecting their rights.

Joanna Smith-Griffin had previously gained recognition, receiving the 2021 Forbes 30 Under 30 Award in Education and being featured in Inc.’s Female Founders 250 list this year. However, these accolades have now been overshadowed by the fraud charges and the downfall of AllHere Education.

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