After a sharp rise in the K-12 space, the artificial intelligence startup AllHere is ending the year with a bankruptcy case and its founder and former CEO under arrest.
Federal prosecutors have charged Joanna Smith-Griffin with defrauding investors out of nearly $10 million, according to an indictment unsealed in Manhattan federal court last week.
Smith-Griffin faces securities and wire fraud and aggravated identity theft charges for allegedly misleading investors, employees, and customers by inflating the company’s revenue, cash position, and customer base, the document says.
Prosecutors allege that Smith-Griffin went as far as to create a fake email address for a real AllHere financial consultant, allowing her to send false financial and client information to investors.
They also say Smith-Griffin claimed to have provided services to multiple districts that never had a contractual relationship with the company, which was a Harvard Innovation Lab venture.
AllHere’s most prominent — and legitimate — customer was the Los Angeles Unified Schools, which had a $6 million contract with AllHere to build an ambitious AI tool for the major district.
“The indictment and the allegations represent, if true, a disturbing and disappointing house of cards that deceived and victimized many across the country,” an LAUSD spokesperson told EdWeek Market Brief in an email. “We will continue to assert and protect our rights.”
LAUSD has since paused its use of the AI assistant, known as “Ed,” which was introduced in March as a “learning acceleration platform.” The tool belongs to LAUSD, the district said in a statement emailed to EdWeek Market Brief in June.
Smith-Griffin’s indictment comes two months after federal prosecutors became involved in AllHere’s ongoing bankruptcy case and subpoenaed documents.
AllHere furloughed the majority of its staff in June and changed its leadership — an action which came to light days after LAUSD’s superintendent was touting its work with the company at a major education conference.
It filed for Chapter 7 bankruptcy in Delaware in August.
Since then, questions have swirled about the cause of the downfall, including a former employee who told The74 in July that he warned LAUSD that AllHere’s data privacy practices violated district policies against sharing students’ personally identifiable information and data-protection best practices.
Smith-Griffin’s indictment does not address those questions about data privacy.
The new indictment also accuses Smith-Griffin of using AllHere’s inflated success to raise her public profile. She was a Forbes 30 Under 30 award recipient and named to Time World’s top edtech companies list earlier this year.
