The Securities and Exchange Commission (SEC) has charged Ilit Raz, CEO and founder of the now-defunct AI recruitment startup Joonko, with defrauding investors of at least $21 million. Raz is accused of making false and misleading statements about Joonko’s customer base, candidate numbers, and revenue. The SEC’s complaint alleges that Raz misrepresented Joonko as having over 100 clients, including Fortune 500 companies, and fabricated testimonials to attract investment. She also allegedly lied about Joonko earning more than $1 million in revenue and claimed a vast number of active job candidates.
To further the deception, Raz is said to have provided falsified bank statements and forged contracts when an investor questioned the legitimacy of her claims. The fraud was exposed in mid-2023 when the investor confronted Raz, leading her to admit to the falsifications. The SEC’s investigation revealed a pattern of deceit, with Raz using buzzwords like “artificial intelligence” to mask the fraudulent nature of her operations.
The SEC’s complaint, filed in the U.S. District Court for the Southern District of New York, seeks a permanent injunction, civil penalties, disgorgement of ill-gotten gains, and a bar from serving as an officer or director in any company. Additionally, the U.S. Attorney’s Office for the Southern District of New York has announced parallel criminal charges against Raz for her role in the scheme.
The SEC’s action underscores its commitment to policing fraudulent activities in the burgeoning AI sector. The investigation, led by Alicia Guo, Ariel Atlas, Neil Hendelman, and Lindsay S. Moilanen, with supervision from Sheldon L. Pollock, highlights the need for vigilance against companies exploiting AI trends to mislead investors.
Reference:
