Ilit Raz, the founder and former CEO of AI startup Joonko, pleaded guilty to federal securities fraud last month. She admitted to raising approximately $27 million by providing investors with fabricated purchase orders and forged bank statements to misrepresent the company's customer base and revenue.
The case highlights the growing legal risks for founders who provide misleading information to investors. According to Cornerstone Research, 15 AI-related securities class actions were filed in the first half of 2026, which is nearly equal to the 16 cases recorded throughout all of 2025.
Founders often rely on directors and officers (D&O) insurance for protection during disputes, but such policies may not cover established misconduct. In a June 2025 settlement, Raz agreed to drop claims against Joonko's D&O policies, leaving questions about the extent of insurance coverage for fraud.
Experts advise founders to maintain clear documentation for all financial metrics. This includes distinguishing between current results and future projections, as well as strictly defining terms like recurring revenue, customer status, and churn to avoid potential personal liability.
