Joonko CEO pleads guilty to $27 million securities fraud
Ilit Raz, the founder of the AI-based startup Joonko Diversity, has pleaded guilty to securities fraud after misleading investors about the company's revenue and customer base. Raz fabricated testimonials and financial documents to secure $27 million in funding before the company eventually went bankrupt.
Why it matters
This case highlights the risks of 'AI-washing' in the startup ecosystem, where founders inflate technological capabilities and financial performance to attract venture capital.
Israeli citizen Ilit Raz pled guilty to securities fraud charges in the US after she was found to have defrauded investors of around $27 million by misleading them about the core aspects of a company she founded, according to the US Attorney for the Southern District of New York.The company, Joonko Diversity, Inc., claimed to offer AI-based services designed to help employers identify and hire prospective job candidates.Raz, the founder and former CEO of Joonko, made false claims about the company's customers and revenue to raise around $27 million in funding from investors between 2021 and 2022.To entice prospective and existing investors, Raz claimed that Joonko's customers included large global companies, including fashion brands, a credit company, and a travel company.According to a 2024 US Securities and Exchange Commission (SEC) complaint, Raz claimed that Joonko had more than 100 customers and had worked with over 100,000 job candidates.
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