The founder of the DEI-focused hiring startup Joonko is facing federal charges for allegedly defrauding investors out of tens of millions of dollars – roughly one year after The Post exclusively reported that the firm had lied to clients about working with several corporate titans.
Ilit Raz, a 38-year-old Israeli entrepreneur, used lies and fabricated documents to secure a whopping $27 million in investments, the Justice Department’s complaint alleged.
“Raz falsely represented that Joonko’s customers included some of the world’s largest companies, including a credit card company, sports apparel brand, online travel company, and luxury fashion brand,” the DOJ said in a release. “In truth and in fact, and as Raz knew, these companies were never Joonko customers.”
As The Post reported, the now-bankrupt Joonko falsely claimed that several major firms, including American Express, PayPal, Accenture and Atlassian, were customers of its platform, which supposedly used AI to automatically connect companies to diverse job candidates.
While listed as “partners” on Joonko’s website, the companies never actually enlisted the hiring platform or had any dealings with it. Other companies listed as partners at various points included Nike, Adidas and Intuit.
Raz faces one count of securities fraud and one count of wire fraud. Each charge carries a maximum sentence of 20 years in prison, the DOJ said in a release.
“To garner fiscal interest in the company’s innovative concept for diverse hiring practices, the defendant’s alleged recruitment methods relied on deception and mistruths rather than transparency and honesty,” FBI assistant director in charge James Smith said in a statement.
The SEC also charged Raz with fraud after a parallel investigation, alleging that she falsely claimed Joonko had more than 100 customers, including Fortune 500 companies, and had submitted fake testimonials from firms touting the hiring platform.
Raz later admitted to a investor that she falsified documents and lied about Joonko’s client roster, the complaint said.
Joonko filed for Chapter 11 bankruptcy last month and its website is no longer available.
Raz did not immediately return a request for comment. A lawyer for Joonko declined comment.
The ex-CEO allegedly lied to investors by claiming Joonko had earned more than $1 million in revenue while building a base of more than 100,000 active job seekers.
Raz also made false claims about the AI capabilities of the Joonko platform, such as assertions that it used a “proprietary algorithm” to scan for high-quality candidates and “machine learning” to improve its matching process.
“Joonko did not have the aforementioned capabilities to connect customers with diverse candidates, and its technology was not as advanced as Raz claimed,” the SEC’s complaint said.
“We allege that Raz engaged in an old school fraud using new school buzzwords like ‘artificial intelligence’ and ‘automation,’” SEC enforcement director Gurbir Grewal added in a statement.
Raz’s alleged scheme surfaced last June just months after the company closed a $25 million funding round with participation by venture firms Insight Partners, Target Global, Kapor Capital and Vertex Ventures.
A September 2022 press release announcing the round claimed “remarkable growth” at Joonko under Raz’s leadership “with 500% growth in sales for two consecutive years.”
A source with knowledge of the situation said Raz had submitted fake invoices that were attributed to real people at real companies, fake wire transfers and even created fake bank accounts to back up her claims.
At the time, Joonko’s board of directors said it had “lost confidence in the CEO’s ability to deliver on repeated requests to develop and support an internal finance function as part of the maturation of the company and its business.”
“The CEO was found to have engaged in egregious, unethical and fraudulent conduct, which caused harm to the company and its shareholders,” the board’s statement added. “The CEO was confronted with the findings of the investigation, and she voluntarily resigned in response.”
Source: NYPOST