Ilit Raz, the founder and former CEO of Joonko Diversity, has pleaded guilty to securities fraud for her role in a scheme to defraud investors and mislead them about core aspects of the company she founded, including the identity and quantity of Joonko’s customers and Joonko’s revenue.
The case has been assigned to U.S. district judge Alvin Hellerstein.
According to the allegations in the superseding indictment and other public filings, Joonko purported to offer an artificial intelligence-based product designed to help prospective employers identify and hire job candidates from diverse backgrounds.
To induce prospective and existing Joonko investors to invest approximately $27 million in funding rounds in 2021 and 2022, Ms Raz made false claims regarding central aspects of Joonko’s business, including falsely representing how many customers Joonko had at the time, and falsely representing the identity of those customers.
For example, Ms Raz falsely represented that Joonko’s customers included some of the world’s largest companies, including a credit card company, sports apparel brand, online travel company, and luxury fashion brand.
As Ms Raz knew, these companies were never Joonko customers. In addition to overstating the number of customers that Joonko had and the identity of those customers, Ms Raz also made false representations about Joonko’s actual and anticipated revenues.
After Ms Raz made false and misleading statements regarding Joonko’s customers and revenue, several investors who received those statements invested in a series of funding rounds with Joonko. Specifically, on or about June 1, 2021, several investors, including venture capital firms, invested approximately $10 million in a Series A round with Joonko. On or about June 2, 2022, several investors, including venture capital firms, invested approximately $17 million in a Series B round in Joonko.
In or about 2023, a Joonko investor became suspicious about Joonko’s performance and requested certain information from Joonko, including bank statements. In response, on or about April 3, 2023, Ms Raz emailed the investor a purported Joonko bank statement showing that the company had an average balance of over $5,000,000. In truth and in fact, and as Ms Raz knew, the bank records Ms Raz emailed to the investor were forged, and the actual bank records showed Joonko’s true account balance was millions of dollars lower.
Less than a week later, on or about April 8, 2023, Ms Raz emailed the investor a set of purported purchase orders for Joonko customers. Ms Raz knew that many of the purchase orders she emailed to the investor were fictitious, contained forged signatures, and were executed on behalf of purported customers that had no business relationship with Joonko.
Ms Raz, 40, an Israeli citizen, pled guilty to securities fraud, which carries a maximum sentence of 20 years in prison.