Shareholders of Joonko Diversity, which billed itself as a provider of an AI-powered diversity recruitment platform, objected to the company’s bankruptcy plan in a court filing on Aug. 23. Meanwhile, criminal charges continue against the company’s founder, Ilit Raz, 38. The criminal charges had been filed by the US Department of Justice. In addition, the US Securities and Exchange Commission filed an enforcement action against Raz in June.

Joonko had filed for Chapter 11 bankruptcy protection in May. Recently, a group of shareholders filed a preliminary objection to Joonko’s bankruptcy plan in federal court.

In their Aug. 23 bankruptcy court filing, they wrote:

“This is a highly unusual chapter 11 case. The debtor has only a token amount of secured and priority debt and almost no unsecured debt. No official committee of unsecured creditors or shareholders has been appointed. The company never had any legitimate business operations, but rather engaged in fundamental fraud and deception from its inception. The company has admitted that its former CEO, who is now under federal criminal indictment and is the subject of a SEC enforcement action, defrauded the company and its investors by, among other things, actively forging documents (including bank statements and customer contracts) to create a mirage of business success. There has never been any ‘business’ to salvage in chapter 11.”

The shareholders noted they objected to releases for the company’s officers and directors from claims.

In a note to SIA, Joonko’s bankruptcy attorney said the company has no comment.

The bankruptcy case is separate from the Department of Justice and SEC case.

In June, the US Attorney’s Office had unsealed its indictment against Raz, founder and former CEO of Joonko. The company had raised $27 million in funding rounds, according to the department after making false claims about customers and revenue. The company also allegedly falsely claimed it had more than 100 customers — including Fortune 500 companies — and provided investors with fabricated testimonials, according to the SEC’s June press release.

Raz is charged with one count of securities fraud and one count of wire fraud in the US Attorney’s Office case. Both carry a maximum sentence of 20 years.

The SEC is charging Raz with violating the antifraud provisions of the federal securities laws and seeks a permanent injunction, civil money penalties, disgorgement with prejudgment interest and an officer-and-director bar against Raz.

In a court filing on July 12, the SEC noted it has not been able to serve Raz in the case, whom it understands is living overseas. Court documents do not list an attorney for Raz.

Joonko Diversity Inc.; United States Bankruptcy Court for the District of Delaware; 24-11007-MFW

Securities and Exchange Commission v. Ilit Raz, US District Court for the Southern District of New York; 1:24-cv-04466-MKV

United States of America v. Ilit Raz; US District Court for the Southern District of New York; 1:24-cr-00004-AKH