Joonko, located in New York City, is reportedly “on the brink of collapse,” according to the New York Post. Founder and CEO Ilit Raz’s fraud allegations came to light earlier this week after the Joonko board claimed she “engaged in egregious, unethical and fraudulent conduct,” ultimately harming “the company and its shareholders.”
Israel’s tech news website CTech first reported the allegations on Sunday.
The CEO allegedly lied to the startup’s investors by saying Joonko had working relationships with more than 150 companies, the Post reported. However, the real number was much lower.
Raz has since resigned.
The mission of Joonko, whose website remains inoperational at this time, was to improve diversity in the hiring process and work environment based on an AI model.
After reviewing the recruiting firm’s financial reports, the board noticed “misstatements” were made, prompting them to investigate the matter.
“Specifically, the board and other executive officers of the company lost confidence in the CEO’s ability to deliver on repeated requests to develop and support an internal finance function as part of the maturation of the company and its business,” Joonko’s board said, Globes reported.
“As a result, the board and other executive officers of the company carried out an extensive review of the CEO’s performance.”
Following the CEO’s allegations, some top executives at Joonko reportedly quit the company.
The board also said it would further investigate the extent to which Raz put Joonko in financial danger and determine the company’s next steps.
An anonymous source close to the situation told the Post that Raz’s alleged fraud included fake invoices that were attributed to real people at real organizations, fake wire transfers and fake bank accounts.
The CEO’s actions were “staggering,” the source said.
Several months before Raz was caught, Joonko fared well as it raised $25 million in fundraising last September with financial backing from Insight Partners, Target Global, Kapor Capital and Vertex Ventures. Joonko said the money would have gone toward increasing its hiring capacity at the Manhattan headquarters, but that effort was cut short.
Insight Partners, one of the venture firms that supported Joonko, released a statement in response to the news.
“Insight does not tolerate, and our investors expect us to take seriously, any findings of misconduct, deceit or unlawful activity at our firm or any of our portfolio companies,” the statement said, according to Globes.
Joonko once boasted it had more than 150,000 job candidates on its website, and some of its partner companies included Adidas, Nike, Intuit, PayPal and American Express.
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