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Education is at a Crossroads: Help Us Illuminate the Path Forward.听

Updated, Nov. 20

Federal prosecutors have of the once-celebrated education technology company AllHere, accusing her of defrauding investors of nearly $10 million as the startup that made AI chatbots for schools fell into bankruptcy.

Joanna Smith-Griffin, a Forbes 鈥�30 Under 30鈥� recipient and Harvard graduate, was arrested at her home in Raleigh, North Carolina, Tuesday on allegations of securities and wire fraud and aggravated identity theft. 

The 33-year-old former educator鈥檚 arrest is the latest chapter in the downfall of 鈥淓d,鈥� a buzzy, $6 million AI chatbot that Smith-Griffin鈥檚 company was tapped to build for the Los Angeles Unified School District before the project was halted and the company shuttered. L.A. schools Superintendent Alberto Carvalho and Smith-Griffin appeared together at several events earlier this year to promote the chatbot, an ed tech innovation Carvalho said was 鈥渦nprecedented in American public education.鈥�

The indictment by the U.S. Attorney鈥檚 Office for the Southern District of New York unsealed in Manhattan federal court accuses Smith-Griffin of defrauding investors and using company funds for a down payment on her North Carolina house and to pay for . 

Smith-Griffin 鈥渙rchestrated a deliberate and calculated scheme to deceive investors鈥� in the company she founded through a Harvard University startup incubator in 2016 to provide a tech-driven solution to student absences. She inflated 鈥渢he company鈥檚 financials to secure millions of dollars under false pretenses,鈥� U.S. Attorney Damian Williams said in a media release. 鈥淭he law does not turn a blind eye to those who allegedly distort financial realities for personal gain.鈥� 

Smith-Griffin is being represented by Eric Brignac, an assistant public defender with the Federal Public Defender’s Office. Brignac, who is based out of Raleigh, did not respond to a request for comment.

In a statement to 麻豆精品, an L.A. schools spokesperson portrayed the district, by far AllHere’s biggest customer, as one of many taken in by Smith-Griffin. Previously, the school district and its inspector general鈥檚 office opened separate inquiries into the school system鈥檚 work with AllHere.

“The indictment and the allegations represent, if true, a disturbing and disappointing house of cards that deceived and victimized many across the country,” the spokesperson wrote in an email. “We will continue to assert and protect our rights.”

Between 2017 and June 2024, prosecutors allege, Smith-Griffin used her control over AllHere鈥檚 bank accounts to transfer at least $600,000 in company funds to her personal account, generally using PayPal and Zelle to make repeat wire transfers under $10,000. 

Federal prosecutors said the fraud scheme began as early as November 2020, when Smith-Griffin allegedly began to misrepresent to her investors the company鈥檚 revenue, customer base and cash on hand. In the spring of 2021, she told investors AllHere had generated some $3.7 million in revenue in the previous year, including through contracts with the New York City and Atlanta school districts. In reality, federal prosecutors allege, the company had only generated $11,000 鈥� and contracts with the two major urban school systems didn鈥檛 exist. 

Key AllHere funders include the venture firms Rethink Education, Spero Ventures and Potencia Ventures. Their representatives  didn鈥檛 respond to requests for comment. 

When investors and an outside accountant accidentally discovered the discrepancies between the company鈥檚 actual financials and its claim to backers, Smith-Griffin masqueraded as a financial consultant to perpetuate the scheme, prosecutors allege. She was accused of creating a fake email address for the phony outside consultant, which she used to send fraudulent documents to her largest investor. 

Though one of the firm鈥檚 biggest investors 鈥渞ecruited high profile鈥� education leaders to the company鈥檚 board of directors, including former Chicago Public Schools CEO Janice Jackson, the indictment notes that Smith-Griffin 鈥渆xercised exclusive control鈥� over AllHere鈥檚 communications with investors, board members, customers and outside vendors.

The indictment adds further uncertainty around the AI chatbot the company created for and launched with such fanfare earlier this year with Los Angeles schools, the country鈥檚 second-largest district.

As K-12 school systems nationwide rush to inject artificial intelligence into their teaching practices, the L.A. chatbot has of what could go wrong. On Tuesday, the U.S. Education Department on ways schools can harness AI while ensuring they don鈥檛 have a discriminatory impact on vulnerable and underserved students. 

In April, Smith-Griffin and Carvalho unveiled the chatbot together at the influential ASU+GSV ed tech conference in San Diego. Carvalho said Ed was the nation鈥檚 first AI-enabled 鈥減ersonal assistant鈥� and would drive academic improvement while providing Los Angeles’s roughly 540,00 students and their families with a trove of helpful information upon request.

Signs of turmoil emerged in June, when 麻豆精品 first reported that Smith-Griffin was out of a job as AllHere furloughed a majority of its staff due to its 鈥渃urrent financial position.鈥� A statement from the L.A. district said the company had been put up for sale. 

The company then filed for Chapter 7 bankruptcy in August. At a bankruptcy hearing in September, Toby Jackson, one of AllHere鈥檚 only remaining employees and its former chief technology officer, struggled to explain why the company had paid Smith-Griffin $243,000 in expenses in the past year alone. 

鈥淭hat is one of the outstanding questions that we also have,鈥� said Jackson, who said that Smith-Griffin 鈥渄id do quite a bit of travel as the CEO of the company.鈥�  

Jackson did not respond to a request for comment.

麻豆精品 first reported the possible criminal charges in early October, when Delaware court documents related to AllHere鈥檚 bankruptcy case revealed a grand jury subpoena by federal prosecutors. Even before the company laid off employees and announced its financial woes, a former employee-turned-whistleblower told 麻豆精品 that AllHere had struggled to produce a 鈥減roper product鈥� for the L.A. district and took shortcuts that ran afoul of school district policies and bedrock student data privacy principles. 

By the time AllHere went bankrupt earlier this year, it never had more than 31 customers total 鈥� less than a third the number Smith-Griffin told investors she had by early 2021. By the time the company collapsed this year, only three of AllHere鈥檚 customers generated more than $100,000 in revenue. 

In total, the felony charges carry a 42-year prison sentence for Smith-Griffin, who began her  career working in a Boston charter school as a teacher and family engagement director.

鈥淗er alleged actions impacted the potential for improved learning environments across major school districts by selfishly prioritizing personal expenses,鈥� FBI Assistant Director in Charge James Dennehy said in the release. 鈥淭he FBI will ensure that any individual exploiting the promise of education opportunities for our city’s children will be taught a lesson.鈥� 

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