Start-Up Founder Who Sold A.I. Chatbot to Schools Is Charged With Fraud

Joanna Smith-Griffin was charged with lying to investors about revenue and her customer base, which she claimed included some of the nation’s largest school districts, including New York City’s.

The founder of an artificial intelligence start-up focused on education was arrested and charged with defrauding her investors, lying about the company’s profits and falsely claiming that some of the largest school districts in the country, including New York City’s, were her customers.

The founder, Joanna Smith-Griffin, started the company, AllHere Education, in 2016, with the goal of using artificial intelligence to increase student and parent engagement and curb absenteeism.

In the years that followed, Ms. Smith-Griffin, 33, misrepresented AllHere’s revenue and customer base to fraudulently raise almost $10 million in funds, according to the indictment. Once the company’s valuation had climbed, she sold some of her stake in it and spent hundreds of thousands of dollars on a down payment for a new home and on her wedding.

Ms. Smith-Griffin was arrested Tuesday in North Carolina, where she lives, and charged with wire fraud, securities fraud and aggravated identity theft. She faces more than 40 years in prison.

AllHere is now in bankruptcy proceedings, prosectors said, and all of its employees have been laid off.

“Her alleged actions impacted the potential for improved learning environments across major school districts by selfishly prioritizing personal expenses,” said James E. Dennehy, the F.B.I. assistant director in New York leading the investigation into Ms. Smith-Griffin. “The F.B.I. will ensure that any individual exploiting the promise of educational opportunities for our city’s children will be taught a lesson.”