NEW YORK (AP) — The founder of an artificial intelligence company that supplied school districts in Los Angeles, New York and Atlanta with a chatbot to create learning plans for students was arrested on fraud charges Tuesday, accused of spending investor money on herself as her company spiraled into bankruptcy.
Joanna Smith-Griffin, 33, of Raleigh, North Carolina, was arrested in her home state and charged with securities and wire fraud, along with identity theft.
She founded ALLHere Education Inc., an artificial intelligence technology company that created “Ed” the chatbot. The Los Angeles Unified School District was among those that used the product for a time before shutting it down, citing the financial collapse of Smith-Griffin's company.
Authorities say the company's products were also used in other major school districts including New York City and Atlanta.
An indictment unsealed Tuesday in Manhattan federal court accused Smith-Griffin of making misrepresentations to investors that enabled her to collect millions of dollars illegally from them since 2020.
It says she used some of the fraudulently obtained money from investors to put a down payment on her home in North Carolina and to pay for her wedding. After the company collapsed and employees were laid off, it entered bankruptcy proceedings and a trustee took over its finances, authorities said.
U.S. Attorney Damian Williams said in a release that she “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.”
It was not immediately clear who would represent her in an afternoon court appearance in North Carolina.
James E. Dennehy, head of New York's FBI office, said she misrepresented the composition of her startup company and “masqueraded as a financial consultant to perpetuate the scheme once discrepancies were discovered.”
He said her “selfishly prioritizing personal expenses” over the company's needs damaged the potential for improved learning environments across major school districts, according to the release.
Larry Neumeister, The Associated Press
