Israeli AI startup founder pleads guilty to $27 million fraud scheme in New York

Ilit Razt, the founder and former Chief Executive Officer of Joonko, made false claims about the company’s customers and revenue to raise around $27 million in funding from investors.

Israeli citizen Ilit Raz pled guilty to securities fraud charges in the US after she was found to have defrauded investors of around $27 million by misleading them about the core aspects of a company she founded, according to the US Attorney for the Southern District of New York.

The company, Joonko Diversity, Inc., claimed to offer AI-based services designed to help employers identify and hire prospective job candidates.

Raz, the founder and former CEO of Joonko, made false claims about the company’s customers and revenue to raise around $27 million in funding from investors between 2021 and 2022.

To entice prospective and existing investors, Raz claimed that Joonko’s customers included large global companies, including fashion brands, a credit company, and a travel company.

According to a 2024 US Securities and Exchange Commission (SEC) complaint, Raz claimed that Joonko had more than 100 customers and had worked with over 100,000 job candidates.

The SEC complaint also detailed that she provided investors with fabricated positive testimonials of alleged customers praising Joonko’s effectiveness.

The US Attorney’s Office asserted that Raz knowingly misled investors and that the companies were never customers of her company.

Several victims of Raz’s fraud scheme were left with millions of dollars in losses when Joonko went bankrupt, according to US Attorney Jamie McDonald.

Joonko fraud scheme uncovered in 2023

The fraud scheme was uncovered around 2023 when one investor became suspicious about Raz’s claims and contacted her to request information about Joonko’s performance.

Raz then forged a bank statement showing that the company maintained an average balance of more than $5,000,000, when the company’s actual balance was millions of dollars less than that.

Raz also sent the investor fictitious purchase orders for alleged Joonko customers that contained forged signatures from entities that had no business relationship with the company.

Her scheme was uncovered, and after pleading guilty to the charges, Raz faces a maximum prison sentence of 20 years.