The Securities and Exchange Commission (SEC) today charged Ilit Raz, CEO and founder of artificial intelligence recruiting startup Joonko, with defrauding investors of at least $21 million by making false and misleading statements about the quantity and quality of Joonko’s clients. the number of candidates on its platform and the company’s revenue.
According to the SEC complaint, Joonko claimed to use artificial intelligence to help clients find diverse and underrepresented candidates to meet diversity, equity and inclusion hiring goals. To raise money for Joonko, the complaint alleges Raz falsely told investors that Joonko had more than 100 customers, including Fortune 500 companies, and provided investors with fabricated testimonials from various companies expressing their appreciation for Joonko and praised its effectiveness.
Raz also allegedly lied to investors that Joonko had earned more than $1 million in revenue and was working with more than 100,000 active job applicants.
When an investor became suspicious of Raz’s claims, Raz allegedly provided the investor with falsified bank statements and forged contracts in an attempt to conceal the fraud. According to the complaint, the scheme fell apart in mid-2023 when the investor confronted Raz, who admitted to falsifying bank statements and contracts and lying about Joonko’s revenue and number of customers.
The SEC’s complaint, filed in the Southern District Court of New York, accuses Raz of violating the anti-fraud provisions of the federal securities laws and seeks a permanent injunction, civil money penalties, disqualification with prejudice and an officer and director bar against by Raz.
In a separate action, the US Attorney’s Office for the Southern District of New York today announced criminal charges against Raz.