Ilit Raz, founder and former CEO of the AI hiring platform Joonko Diversity, admitted in Manhattan federal court Thursday that she defrauded investors out of roughly $27 million by fabricating customer lists and revenue figures. The guilty plea to securities fraud marks the end of a saga that began with Joonko’s internal collapse in 2023 and escalated into federal prosecution the following year.
The confession underscores a widening crackdown on startups that wrap ordinary deception in the language of artificial intelligence. Regulators have grown increasingly skeptical of companies claiming sophisticated AI capabilities without evidence. Raz’s case now serves as a prominent example of that enforcement push.
Prosecutors said Raz secured the fraudulent funding through two major raises in June 2021 and June 2022. During those pitches, she claimed Joonko had served over 100,000 job candidates and counted more than 100 corporate clients. She named major fashion brands, a credit company, and a travel firm. None of them had ever worked with Joonko.
Raz backed those assertions with fake purchase orders, fabricated testimonials, and forged signatures from companies with zero connection to the startup. She also doctored a bank statement to show an average balance above $5 million. Court records reveal the actual figure sat millions of dollars lower. The Series B round alone attracted $25 million from Insight Partners, with Tarreceive Global, Kapor Capital, and Vertex Ventures Israel also participating.
The scheme unraveled in 2023 after an investor grew suspicious. Joonko’s board launched an internal review into allegations that Raz misled backers about paying customers. By the time Joonko filed for Chapter 11 bankruptcy in Delaware on May 24, 2024, investors had absorbed millions in losses.
Federal prosecutors unsealed securities and wire fraud charges against Raz on June 11, 2024. That same day, the SEC filed a parallel civil suit seeking disgorgement, penalties, and a permanent ban on Raz serving as an officer or director. Regulators later revealed Raz claimed Joonko ran on seven proprietary AI algorithms. No such technology existed. Raz now faces up to 20 years in prison.
