Friday, 14 June 2024

SEC Charges Joonko CEO And Founder With Fraud

by BD Banks

SEC Charges Joonko CEO And Founder With Fraud

Joonko, a New York City artificial intelligence (AI) startup, operated an AI-driven job board to promote diverse and inclusive employee hires. Based on a June 2023 New York Post report, Raz resigned after an internal company investigation found that she had “engaged in egregious, unethical and fraudulent conduct, which caused harm to the company and its shareholders”.

Raz reportedly claimed that Joonko collaborated with over 100 companies when its actual customer base was much smaller. In May 2024, CTech reported that Joonko had filed for Chapter 11 bankruptcy.

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Joonko claimed that its AI could help clients find “diverse and underrepresented candidates” to meet equitable and diverse labour targets. Raz alleged that her company also featured Fortune 500 companies and falsified appreciation testimonials to support her claims. According to the SEC, she told investors that Joonko revenue exceeded $1m, and when an investor queried this, Raz provided fabricated bank statements.

The SEC filed its charges with the US Attorney’s Office for the Southern District of New York on 11 June 2024. Gurbir S. Grewal, the SEC’s Director of the Division of Enforcement, commented:

We allege that Raz engaged in an old school fraud using new school buzzwords like ‘artificial intelligence’ and ‘automation’. As more and more people seek out AI-related investment opportunities, we will continue to police the markets against AI-washing and the type of misconduct alleged in today’s complaint.

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