The head of an education technology startup that developed a highly touted chatbot for the Los Angeles school system has been arrested and charged with fraud.
Federal prosecutors accuse Joanna Smith Griffin of defrauding investors in an indictment unsealed Tuesday, charging her with securities fraud, wire fraud and aggravated identity theft.
Smith-Griffin, 33, is the founder and former CEO of Boston-based AllHere. The company has developed an artificial intelligence tool called Ed that is being touted as revolutionary for student education and school interaction with the LA Unified School District. the families it serves;
After unveiling the chatbot to much fanfare in March, Los Angeles school officials quietly cut it months later from the tool, which was supposed to answer any question from students or parents in an accurate, informative, and private way. did.
The episode was embarrassing for LA Unified, but the school raised the issue. Alberto Carvalho was making a promotional appearance alongside Smith-Griffin. The financial damage to the nation’s second-largest school system, which has an $18.4 billion budget this year, is expected to be limited.
School district officials say they spent about $3 million of the $6 million pledged to the company and received services and technology for that investment. Carvalho recently told the Times that he is optimistic about salvaging the technology for future use.
On Tuesday, Carvalho gave brief comments on the ongoing criminal case.
“If true, the indictment and allegations represent a disturbing and unfortunate house in the sand that deceived and victimized many people across the country,” Carvalho said. “We will continue to assert and defend our rights.”
According to prosecutors, Smith-Griffin orchestrated “a deliberate and calculated scheme to deceive All Here Education’s investors and inflate the company’s finances in order to secure millions of dollars under false pretenses.” That’s what it means.
She could not be reached for comment Tuesday.
Carvalho said in July that he would appoint a task force to investigate what went wrong with the L.A. unification project and chart a path forward. At the time, he expected the task force, once formed, to complete its work in about three months. Since then, no information has been provided regarding the task force or its progress.
AllHere’s website was up and running as of Tuesday night, but the contact page said: “Due to the Company’s current financial condition, the Board of Directors has decided to furlough the majority of its employees on June 14, 2024. It is written as “. The company blog was last updated in mid-April.
According to the U.S. Attorney’s Office, Allhere is currently in Chapter 7 bankruptcy, employees have been laid off, and the company is under the control of a court-appointed bankruptcy trustee.
Smith-Griffin was arrested in North Carolina on Tuesday and is scheduled to appear before a magistrate judge, authorities said.
According to the indictment, from approximately November 2020 to approximately June 2024, Mr. Smith-Griffin misrepresented All Here’s revenue, customer base, and cash to investors.
For example, in the spring of 2021, she told potential investors that All Here had generated approximately $3.7 million in revenue in 2020, had approximately $2.5 million in cash on hand, and that the New York City Department of Education and the New York City Department of Education He is said to have said that the school district has major clients such as the Ministry of Education. Atlanta Public Schools.
In fact, Allhere earned about $11,000 in revenue in 2020, had about $494,000 in cash, and does not have contracts with many of the customers it claims, including the New York City Department of Education and Atlanta Public Schools. , the indictment states.
These false reports are said to have continued even after AllHere’s collapse. When the company was sinking, she was able to get nearly $10 million from investors and sought an additional $35 million from private equity investors, but ultimately abandoned the investment.
Prosecutors said Smith-Griffin used some of the fraudulent funds to pay for a down payment on a home in North Carolina and for a wedding.
When AllHere’s investors and external accountants discovered discrepancies between the company’s actual financials and what Ms. Smith-Griffin had communicated to investors, she attempted to conceal her actions and He allegedly even went so far as to create a fake email account for the consultant. It was used to send additional fraudulent financial documents to her largest investor.
“Joanna Smith-Griffin allegedly misrepresented the structure of her startup company to defraud investors of millions of dollars and, after discrepancies were discovered, posed as a financial consultant to perpetuate the scheme,” FBI Assistant Director in Charge Assistant Deputy James E. Dennehy said. “Her conduct is alleged to have affected the likelihood of improving the learning environment across a major school district by selfishly prioritizing personal expenses.”
Carvalho was touting Ed as an AI-enhanced student advisor that will be a component of a unique Individual Acceleration Plan (IAP) for every student.
Full deployment of IAP is pending. And it’s hard to find students, teachers, or other staff who have used any part of the system since its official launch. Not available in most schools.
Still, LAUSD officials say parents and students now have access to a wide range of information online related to grades, test scores, assignments, programs, courses and general district information about schools.
