Joonko: The AI That Was Forged Paper

DerekOkay, so picture this pitch: a hundred thousand candidates, Fortune 500 clients lining up, AI doing all the matching so nobody has to admit their hiring process is a mess.

GrantSounds expensive.

DerekTwenty-seven million dollars expensive.

GrantWait, wait, wait. For a hiring app?

DerekFor a hiring app that, plot twist, mostly didn't do the thing it said it did.

GrantShocking. Truly shocking.

DerekI know. Nobody saw that coming.

GrantSo I'm the guy standing in the room going, "Hang on, did anyone actually call these Fortune 500 companies?"

DerekThat's the role, yeah.

GrantGreat. I've got a career.

DerekThis is Vaporware. I'm Derek.

GrantAnd I'm Grant, and apparently my whole job tonight is asking who checked the math.

DerekBecause here's the through line. This isn't a one-off. This is the AI fraud genre we've been tracking all year just moving jobs, from the pitch deck right into a plea agreement.

GrantFrom slideshow to sentencing.

DerekExactly. And before we get to the plea, you gotta hear how the pitch actually got sold, because the hiring boom made it almost too easy. So the pitch wasn't just a number. It was a whole resume. Joonko billed itself as an AI matching platform, supposedly plugged into Fortune 500 hiring pipelines.

GrantAI matching. That phrase alone got money moving in twenty-twenty, twenty-twenty-one.

DerekEvery recruiter deck had it. Raz just wrapped diversity hiring around it, said the algorithm found candidates nobody else could find.

GrantAnd nobody on the buy side asked how the matching actually worked?

DerekGrant, that's the whole genre.

GrantFair.

DerekInc. reported she didn't do it in one swing either. Two separate rounds spaced out, each one building on the story of the last.

GrantSo round two gets easier because round one already happened.

DerekExactly. Momentum is its own credential.

GrantWait. Who's actually checking the client list between round one and round two?

DerekNobody at the fund level, apparently. That's the gap.

GrantCool. Cool, cool, cool.

DerekRight?

GrantOkay, but walk me through why Fortune 500 clients specifically work so well on investors. Like, why is that the detail that unlocks the checkbook?

DerekBecause it's shorthand for due diligence somebody else supposedly already did. If a giant company signed off, the thinking goes, they must have vetted the technology, the compliance, all of it.

GrantSo the Fortune 500 name isn't just a customer. It's a stand-in for a whole audit nobody actually ran.

DerekExactly. It's borrowed credibility. You don't have to prove your AI works if you can imply someone with a legal department already decided it does.

GrantAnd different investors probably bought that at different speeds, right? A seed stage angel isn't doing the same homework as a growth fund writing a bigger check.

DerekSure. And that's part of why staging it across two rounds works. Early money just wants a story that sounds plausible enough to get in cheap. Later money wants to see traction, so you hand them the traction they're asking for.

GrantEven if the traction is invented.

DerekEven then. Each round's investors are trusting that the previous round already did the hard verification, and nobody in that chain is the one actually calling the companies to check.

GrantSo we've got the AI story and the client story. What's actually backing either one?

DerekThat's the real question. Because the pitch deck is just words on a slide. Somebody has to hand over paper, bank statements, purchase orders, something a diligence associate can hold and stamp.

GrantAnd?

DerekAnd, get this, that paper existed. It just wasn't real.

GrantHold on. You mean actual Forged documents? Not just an exaggerated pitch?

DerekForged bank statements, Fabricated purchase orders, paper built to answer exactly the questions Grant's asking right now.

GrantSo the fraud didn't stop at the sentence, "We serve big companies." Somebody sat down and manufactured the evidence for it.

DerekThat's the shift. The pitch gets you in the room. The paperwork is what gets the check signed.

GrantThat's a different level of effort than just talking big in a meeting.

DerekWay different. And it's where this stops being a story about hype and starts being a story about a crime. Okay, so the SEC's twenty-twenty-four civil complaint, the one before any criminal charges, lays out exactly how those forgeries got used.

GrantWait, the SEC filed first, before the DOJ even showed up?

DerekYeah. Civil suit in twenty-twenty-four, guilty plea comes later. One of Joonko's investors got suspicious and started asking questions about the money.

GrantAnd?

DerekAnd instead of coming clean, Raz sent that investor a forged bank statement.

GrantShe just made one up?

DerekFabricated it, per the complaint.

GrantWait, nobody actually called the bank to confirm the statement was real?

DerekDoesn't sound like it.

GrantThat feels like the first step of due diligence, not the last resort.

DerekYou'd think, but the SEC civil case goes way past one document. It alleges she defrauded investors of at least twenty-one million dollars through false claims about customers, candidates, and revenue.

GrantTwenty-one million just in the SEC civil number.

DerekRight. Separate from whatever the criminal total ends up being.

GrantHow does a number like that even hold together for years without someone catching it?

DerekBecause every lie was backing up the last. Fake purchase orders backing the revenue claims. Fake bank statements backing the purchase orders.

GrantA whole little ecosystem of fraud propping itself up.

DerekBasically. And then there's the customer side.

GrantWho are these customers then?

DerekThis is the part that gets almost cartoonish. Reporting puts she invented customers outright. Fashion brands, a credit card company, travel brands, and then Fabricated glowing testimonials attributed to them.

GrantTestimonials from companies that never used the product.

DerekNever signed a contract. Never talked to anyone at Joonko. She wrote the compliment herself.

GrantThat's not fudging a spreadsheet, that's writing fan mail to yourself.

DerekBasically, yeah. And Reporting puts this stretch of Fabrication running through 2021 into 2022.

GrantSo a year, maybe two, of just inventing companies out of thin air.

DerekPretty much.

GrantHow does that survive a reference check, though? Somebody has to call the client.

DerekIf the client doesn't exist, there's no number to call. The logo looks real, the name looks real. Maybe there's a title attached to the quote. It's a lot of separate lies holding each other up. Forged bank documents, invented purchase orders, invented customers, invented quotes.

GrantAnd this is all sitting in one Civil complaint.

DerekAnd that's just the civil filing, months before prosecutors ever got involved.

GrantSo investors had that number sitting out there in public for a while.

DerekOne complaint, and it wasn't shy about naming what it actually was.

GrantMeaning?

DerekThe SEC didn't just list the forgeries and move on. They had a name for the whole genre. Grewal, that's the SEC's enforcement director, put out a line about Joonko that I haven't been able to shake.

GrantOh, yeah?

DerekSEC Enforcement Director Grewal said it was, quote, "An old school fraud using new school buzzwords like artificial intelligence and automation."

GrantThat's brutal, and accurate.

DerekRight? He's basically saying strip away the AI branding, and you've got a guy, or in this case a woman, mailing fake bank statements. That's it. That's the whole trick.

GrantSo the tech was the costume.

DerekThe tech was the costume. The fraud underneath is the same one people have been running since before computers existed.

GrantOkay, but does the SEC actually say that, or is that us reading into it?

DerekNo, that's the point of naming it. Buzzwords, plural. He's not talking about one startup. He's talking about a genre.

GrantWhich tracks with basically every episode we've done this year.

DerekAnd worth pausing on what securities fraud actually covers here, because it's not just a moral judgment. It's a specific legal charge tied to lying to investors about the thing they're buying into.

GrantSo it's less about AI hype as a vibe, and more about the fact that investors handed over money based on statements the government says were false.

DerekRight. The charge isn't, "Your product wasn't as good as advertised." It's, "You made material misrepresentations to get someone's money." And that's a very different courtroom.

GrantWhich is why a civil complaint and a criminal plea can describe the exact same conduct and still land completely differently for the person involved.

DerekExactly. And it's not just the SEC on this one.

GrantWhats do you mean?

DerekThe FBIs New York field office put out its own announcement, separate press release confirming the founder and former CEO pled guilty to securities fraud.

GrantSo two federal agencies, two separate statements, same person.

DerekSame person. The FBIs version doesn't add color. Its pretty dry. But it corroborates the whole thing top to bottom. This wasnt just a civil filing that fizzled.

GrantBecause a civil complaint on its own, people can settle those and walk.

DerekSure. Pay a fine, admit nothing, move to Miami.

GrantSounds like half our episodes.

DerekBut when the FBI's involved, that's criminal exposure. That's not a fine. That's a different building entirely.

GrantSo which building are we ending up in?

DerekIt also means two separate agencies independently looked at the same conduct and reached the same conclusion. That's not one office having an off day. That's a pattern holding up under two different reviews.

GrantWhich matters, because usually when we cover these stories, it's one filing and a lot of speculation about whether charges will ever actually follow.

DerekHere, they already did. The civil complaint laid out the mechanics, and the criminal side confirmed the same person, the same conduct, just a heavier consequence attached.

GrantSo we're not waiting to see if this turns criminal. It already has.

DerekAnd that's before we even get to sentencing exposure, which is its own can of worms.

GrantSave it for the next segment, then.

DerekWait for it, because that 2024 civil complaint we just walked through, that is nowhere near where this story ends.

GrantOh, I felt that coming.

DerekOh, it's coming. Okay, so here's the actual gavel moment.

GrantWait for it?

DerekSeptember this year, Manhattan federal court. Raz stands up and pleads guilty. Hoodline reported she pled guilty to defrauding investors of $27 million.

Grant27 again.

DerekSame number, new document. Pitch deck line becomes a federal charge.

GrantWait, walking into court and pleading guilty is different from being convicted at trial, right? She's not fighting any of this anymore.

DerekRight. A guilty plea usually means the fight's over. No trial, no jury. She's accepting the government's version of events at this point.

GrantWhich usually happens when the paper trail is bad enough that going to trial isn't a winning move.

DerekThat tracks with everything we just walked through in the last segment.

GrantI want the timeline, though. When was she actually out there raising this thing?

DerekThat same 2021 to 2022 window we already flagged. The Jerusalem Post ties the raise squarely inside it.

GrantSo nothing new on the calendar, just a new stamp on the file.

DerekBasically.

GrantWhat's she actually facing now that it's criminal?

DerekInc. reported she's now facing up to 20 years in prison.

Grant20 years?

DerekThat's the exposure on paper. Sentencing's its own conversation. We'll see where the judge actually lands.

Grant20 years is the number on paper, but realistically, how often does a first time offender in one of these fraud cases actually serve anywhere near the max?

DerekRarely the full number, from what we've seen across other cases like this. The statutory max is more of a ceiling that signals how seriously prosecutors are treating it, not a prediction of the actual sentence.

GrantSo it's more of a message than a forecast.

DerekRight. It tells you how the government is framing the crime. Whatever she actually gets, we won't know until sentencing happens.

GrantDid anybody say out loud what happened to the money these people put in?

Speaker 3The US attorney on the case, Jamie McDonald, said several investors were left holding major losses when Joonko bankrupted.

GrantSo the company didn't just get caught lying, it cratered.

Speaker 3Yeah. There's no office to walk into anymore.

GrantThat's rough for whoever wired money in good faith.

Speaker 3It is. You go from the candidate pitch and the Fortune five hundred name drops to a bankruptcy filing and a plea deal in a Manhattan courtroom.

GrantAnd bankruptcy means whatever assets were left get carved up in a process that's separate entirely from the criminal case.

Speaker 3Exactly. Two different tracks. One figuring out who gets pennies on the dollar, the other figuring out prison time.

GrantSo even if creditors do get something back eventually, it's not going to look anything like what they put in.

Speaker 3Doesn't sound like it, no.

GrantDude, that's a hell of a fall.

Speaker 3And it's not a fluke, Grant. It's not just one founder having a bad year.

GrantWait, what do you mean?

Speaker 3I mean twenty twenty-six has been stacking these up. Joonko's one line in a much bigger ledger of companies caught overstating what their AI actually does.

GrantOkay, now I'm interested. How many are we talking?

Speaker 3More than you'd think, and none of them learned from the last one.

GrantShocking.

Speaker 3Shall we? Okay, so Joonko isn't the SEC's first AI rodeo. It's not even close.

GrantHow far back does this go?

Speaker 3The SEC's enforcement record shows this goes back to March of twenty twenty-four, when they hit two investment advisors, Delphia and Global Predictions, for lying about how much AI was actually driving their decisions.

GrantTwo investment shops. Not exactly household names.

Speaker 3Right. But then in January twenty twenty-five, they went after Presto Automation, and that one mattered because it was the first time they'd done it to a public company.

GrantSo it escalates. Private advisors, then a company with actual shareholders.

Speaker 3Exactly the trajectory.

GrantWait, how do they even prove the AI wasn't real? Like, do they just ask nicely?

Speaker 3No. Reporting on the SEC's process says they now run digital forensics on these companies, pulling logs, checking whether the model that's supposedly making decisions is even running.

GrantOh, they're actually opening the hood.

Speaker 3They're opening the hood.

GrantThat's a very different world than trust the pitch deck.

Speaker 3And it's not just the SEC. Switching agencies for a second, the FTC's own case filings say that on May twenty-first of this year, they filed their thirteenth AI-washing case since twenty twenty-four. Thirteen in two years. This one was against a company called CMG Media plus two marketing partners over a tool they called Active Listening.

GrantThat sounds like it's already trying too hard.

Speaker 3It gets better. The tool was supposed to be AI-powered ad targeting for small businesses.

GrantSupposed to be.

Speaker 3It didn't exist. No AI, no listening, none of it. Small business owners were paying for a feature that was never built.

GrantSo it's not Fortune five hundred candidates this time. It's some guy who owns a plumbing company getting sold a ghost.

Speaker 3Same con, smaller stage.

GrantOkay, but is this actually accelerating, or are we just paying more attention because we did an episode about it?

Speaker 3No, it's real. Panelists at a securities conference this May, a room full of former SEC and DOJ people, said AI-related securities cases are on pace to double this year.

GrantDouble.

Speaker 3Even while overall federal securities enforcement is sitting at some of its lowest levels ever.

GrantHold on. So enforcement is shrinking everywhere except AI.

Speaker 3That's the split. Budget's down, head count down, and this one category is the exception.

GrantThat tells you something about where the fraud is actually concentrated right now.

Speaker 3It tells you where the easy lies are. Say AI in twenty twenty-one, nobody blinks. Say it in front of the wrong regulator in twenty twenty-six, and you've basically painted a target on yourself.

GrantSo Joonko wasn't some outlier they happened to catch.

Speaker 3Oh, you're gonna love this part because when you zoom out, Joonko stops looking like one bad founder and starts looking like a template. So zoom all the way out with me for a second.

GrantZooming.

Speaker 3Every single case we just walked through, the FTC filings, the SEC sweep, Joonko sitting right in the middle of it, none of that is a slowdown. That's a cycle finishing itself.

GrantMeaning what exactly?

Speaker 3Meaning the pitch deck stage isn't the end of the story anymore. It's just chapter one. Chapter two is federal court.

GrantRight. The same energy that used to raise money now raises indictments.

Speaker 3I mean, kind of, yeah.

GrantWait, so is the argument that AI fraud is getting caught more or that there's just more of it to catch?

Speaker 3Both, honestly. The volume of AI claims exploded, so the volume of fake AI claims exploded right alongside it. Enforcement is just now catching up to the backlog.

GrantAnd Joonko's not some outlier in that backlog.

Speaker 3No. She's a case study. One founder, forged paperwork, and a plea agreement that reads almost identical to cases twice her size.

GrantThat's the part that gets me. It's not even a sophisticated con at this point. It's a recognizable shape.

Speaker 3A shape regulators clearly know how to spot now.

GrantWhich raises the actual question, right? Can they keep spotting it? Because for every Joonko that gets indicted, how many are still out there mid-raise telling investors their AI does something it doesn't?

Speaker 3That's the uncomfortable math.

GrantThe SEC and FTC cases we just went through, those are the ones that got caught. Nobody's tallying the ones that didn't.

Speaker 3Which is exactly why this show keeps coming back to this stuff. Joonko isn't the last version of this story.

GrantIt's just the one with paperwork ugly enough to get noticed.

Speaker 3Ugly enough and public enough.

GrantSo where's that leave us?

Speaker 3Watching for the next plea agreement probably, because the pitch decks never stopped getting written.

GrantOnly the endings changed.

Speaker 3So that's Joonko. Another founder, another forged folder, another plea deal.

GrantSame genre, different name tag.

Speaker 3Exactly.

GrantWhat I keep coming back to is the timing. This isn't twenty fifteen anymore. Regulators clearly know the playbook now.

Speaker 3Sure. And this time, the paperwork actually caught up with her. Forged bank statements, invented customers, a guilty plea. That's a closed loop, not an open question.

GrantOne less pitch deck out there lying about what it does.

Speaker 3One less. Yeah.

GrantI'll take it.

Speaker 3Well, if you've got a friend who nods along at every pitch deck with the word AI on it, send them this one.

GrantForward it right now.

Speaker 3And subscribe, leave us a review. It actually helps people find the show.

GrantDo it before you close app.

Speaker 3See you next time.