NEW YORK — The creator of an artificial intelligence company that provided school systems in major cities such as Los Angeles, New York, and Atlanta with a chatbot designed to personalize learning had been taken into custody on fraud charges. Joanna Smith-Griffin, a 33-year-old resident of Raleigh, North Carolina, was apprehended in her home state on allegations that she misappropriated funds from investors while her company faced financial difficulties and eventually went bankrupt.

Smith-Griffin established ALLHere Education Inc., which developed the chatbot named “Ed.” The Los Angeles Unified School District was among the educational entities that utilized this technology before deciding to discontinue its use following the financial downturn of Smith-Griffin’s business.

The company’s products were also reportedly utilized by other significant school districts, including those in New York City and Atlanta. An indictment released on Tuesday in Manhattan federal court detailed accusations against Smith-Griffin for making false claims to investors, which allowed her to illegally amass millions of dollars since 2020.

According to the allegations, Smith-Griffin used a portion of the funds acquired through deceitful means to make a down payment on her residence in North Carolina and to cover expenses related to her wedding. Following the company’s decline and subsequent layoffs, it filed for bankruptcy, prompting a trustee to assume control of its financial matters.

U.S. Attorney Damian Williams stated that she devised a systematic and intentional plan to mislead investors in ALLHere Education, Inc., exaggerating the company’s financial situation to illegally secure millions under false pretenses.

As of now, it remains uncertain who will represent her during an afternoon court session in North Carolina. James E. Dennehy, the head of the FBI office in New York, indicated that Smith-Griffin misrepresented the structure of her startup and posed as a financial consultant when inconsistencies in her claims were brought to light. He remarked that her preference for her personal financial interests over the company’s necessities had detrimental effects on the prospects for enhancing educational environments in major school districts.