NYC Gazette

Damian Williams, the United States Attorney for the Southern District of New York, and James Smith, the Assistant Director in Charge of the New York Field Office of the Federal Bureau of Investigation (FBI), announced today the unsealing of an indictment charging Ilit Raz, the founder and former Chief Executive Officer of Joonko Diversity, Inc. (Joonko), with securities fraud and wire fraud. The charges pertain to defrauding investors and misleading them about core aspects of her company, including customer identity and revenue figures. On May 24, 2024, Joonko filed for bankruptcy protection in the U.S. Bankruptcy Court for the District of Delaware. The case has been assigned to U.S. District Judge Alvin K. Hellerstein.

U.S. Attorney Damian Williams stated: “As alleged, Ilit Raz falsely represented key aspects of her company, Joonko Diversity, Inc., and fabricated documents to support those lies in order to obtain $27 million in investments. Raz’s now-bankrupt company allegedly left victim investors with millions of dollars in losses. Entrepreneurs tempted to artificially inflate revenues to solicit investments should be warned that this Office keeps a watchful eye on funding rounds and will continue to protect market investors.”

FBI Assistant Director in Charge James Smith added: “Ilit Raz, the founder and former CEO of Joonko, allegedly defrauded her investors of more than $27 million by misrepresenting the esteem and scope of her clientele as well as grossly inflating the company’s revenue in forged financial statements. 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. The FBI is dedicated to protecting our nation’s economic framework, especially from fraudulent schemes designed to ensnare stakeholders and pilfer their pockets.”

According to allegations detailed in the indictment unsealed today in Manhattan federal court:

Joonko purportedly offered an artificial intelligence-based product designed to help employers identify and hire job candidates from diverse backgrounds. To induce prospective and existing investors into providing approximately $27 million during funding rounds in 2021 and 2022, Raz made false claims about key aspects of Joonko's business—such as customer numbers and identities.

For instance, Raz falsely claimed that some of Joonko's customers included major global companies like a credit card company, sports apparel brand, online travel company, and luxury fashion brand—none were actually customers according to allegations.

Raz also misrepresented actual and anticipated revenues for Joonko.

Following these false representations regarding customers and revenue figures several investors participated in funding rounds with Joonko—investing around $10 million during a Series A round on June 1, 2021; followed by approximately $17 million during a Series B round on June 2nd next year.

In or around 2023 one investor ("Investor-1") became suspicious about Joonko's performance requesting specific information—including bank statements—from Joonko which led Raz on April 3rd emailing Investor-1 purported bank statements depicting an average balance exceeding five million dollars whereas actual balances were significantly lower accordingto allegations.

Less than a week later—on April 8th—Raz emailed Investor-1 fictitious purchase orders containing forged signatures executed on behalf non-existent customers without any business relationship with Joonko alleges indictment

Raz aged thirty-eight Israeli citizen charged one count each securities wire fraud carrying maximum sentences twenty years prison respectively

Maximum potential sentences prescribed Congress provided informational purposes only sentencing determined judge

Williams praised outstanding work FBI thanked U.S Securities Exchange Commission parallel civil action against Raz handled Office Securities Commodities Fraud Task Force Assistant Attorneys Thomas Burnett Peter Davis Nicholas Folly charge prosecution

Charges contained Indictment merely accusations defendant presumed innocent unless proven guilty