Israeli Tech CEO Admits to Defrauding Investors of $27 Million

Elite Raz, the 40-year-old Israeli founder and former CEO of the artificial intelligence company Joonko, has pleaded guilty to securities fraud in a scheme that defrauded investors of approximately $27 million. According to the U.S. Department of Justice, Raz presented false data about the company's clients and revenue, and forged documents to secure the funds. Joonko, established in 2016, developed an AI platform aimed at helping employers recruit diverse candidates.

Prosecutors stated that Raz misled existing and potential investors by fabricating information regarding the number of clients, their identities, and the company's current and future revenue. She falsely claimed major international corporations, including a credit card company, a sportswear brand, an online travel firm, and a luxury fashion label, were clients, when in reality, these companies had no business relationship with Joonko. Investors and venture capital funds subsequently invested about $10 million in a June 2021 funding round and an additional $17 million in a June 2022 round.

Suspicion arose in 2023 when an investor requested financial details, including bank statements. Raz provided a document indicating an average company account balance exceeding $5 million, which authorities determined was forged and significantly inflated. Shortly after, she sent the same investor purchase orders attributed to company clients, many of which were allegedly fictitious, bore forged signatures, and were issued on behalf of companies that never worked with Joonko.

The case, which first came to light in mid-2023, caused significant turmoil. Raz resigned after the board accused her of dishonest and unethical conduct. Joonko ceased operations, laid off its employees, and later entered court-protected reorganization. The company is now bankrupt, leaving investors with substantial losses, according to the Justice Department.

Raz faces a maximum sentence of 20 years in prison for the offense to which she pleaded guilty. The final sentence will be determined by Federal Judge Alvin Hellerstein.