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. The U.S. Department of Justice announced that Raz presented false information about the company's clients and revenues and forged documents to secure the funds. Joonko, established in 2016, developed an AI platform aimed at helping employers recruit diverse candidates.

According to the DOJ, Raz misled existing and potential investors by fabricating details about her client base and the company's current and future earnings. 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. These misrepresentations led investors and venture capital funds to inject about $10 million in June 2021 and an additional $17 million in June 2022.

Concerns surfaced in 2023 when an investor requested financial performance data, including bank statements. Raz provided a document indicating an average company account balance exceeding $5 million, which authorities later determined was forged and significantly inflated. Shortly after, she submitted purchase orders attributed to 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 at Joonko. Raz resigned after the board accused her of dishonest and unethical conduct. The company ceased operations, laid off its employees, and subsequently entered court-supervised restructuring. The DOJ stated that Joonko is now bankrupt, leaving investors with substantial losses. Raz faces a maximum sentence of 20 years imprisonment, with the final sentence to be determined by Federal Judge Alvin Hellerstein.