Founder of Education Technology Startup Arrested and Charged with Fraud
Federal prosecutors have accused Joanna Smith-Griffin, the founder and former CEO of AllHere, of defrauding investors and charged her with securities fraud, wire fraud, and aggravated identity theft.
Background
Smith-Griffin, 33, founded AllHere, a Boston-based company that created “Ed,” an artificial-intelligence tool designed to revolutionize education and interaction between the Los Angeles Unified School District (LAUSD) and families. The chatbot was unveiled with great fanfare in March, but months later, LAUSD officials quietly disconnected the tool.
Indictment and Allegations
According to the indictment, Smith-Griffin orchestrated a “deliberate and calculated scheme to deceive investors in AllHere Education, Inc., inflating the company’s financials to secure millions of dollars under false pretenses.” She allegedly misrepresented AllHere’s revenue, customer base, and cash to investors, claiming the company had generated $3.7 million in revenue in 2020, had $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.
False Claims and Misrepresentations
The indictment stated that AllHere had actually generated only $11,000 in revenue in 2020, had $494,000 in cash, and did not have contracts with many of the customers it claimed. 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, prosecutors said.
Consequences
As a result of the fraud, AllHere is now in Chapter 7 bankruptcy, its employees have been laid off, and the company is under the control of a court-appointed bankruptcy trustee. The LAUSD has spent about $3 million of what was a $6-million commitment to the firm and received services and technology for that investment.
Investigation and Arrest
Smith-Griffin was arrested Tuesday in North Carolina and is set to appear before a magistrate judge. The FBI Assistant Director in Charge James E. Dennehy said, “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.”
Conclusion
The case serves as a reminder of the importance of transparency and accountability in the education technology industry. The alleged fraud has not only damaged the reputation of AllHere and LAUSD but also potentially impacted the potential for improved learning environments across major school districts.
FAQs
Q: What was AllHere’s purpose?
A: AllHere was an education technology startup that created an artificial-intelligence tool designed to revolutionize education and interaction between the Los Angeles Unified School District (LAUSD) and families.
Q: What was the chatbot called?
A: The chatbot was called “Ed.”
Q: Why was the chatbot disconnected?
A: The chatbot was disconnected due to alleged fraud committed by the founder and CEO, Joanna Smith-Griffin.
Q: What are the consequences for AllHere?
A: AllHere is now in Chapter 7 bankruptcy, its employees have been laid off, and the company is under the control of a court-appointed bankruptcy trustee.
Q: What is the current status of the LAUSD’s Individual Acceleration Plan (IAP)?
A: The full rollout of the IAP is on hold, and it’s hard to find students, teachers, or other staff who have used any part of the system since its official launch. However, parents and students currently have online access to a wide array of information related to grades, test scores, assignments, and general school-district information.
