Former Joonko CEO Ilit Raz suing company for $300,000 in legal expenses
Former Joonko CEO Ilit Raz suing company for $300,000 in legal expenses
Raz, who left the company amid allegations from the board that she “engaged in egregious, unethical, and fraudulent conduct”, is alleging corporate failure to cover attorney expenses related to an investigation
Ilit Raz, the former CEO of Joonko who left the company amid allegations from the board that she “engaged in egregious, unethical, and fraudulent conduct”, is suing the company she co-founded in a Delaware court, seeking $300,000 to cover her legal expenses. The lawsuit, first reported by the website Law360, was filed last Thursday. While no public announcement on the matter has been made, it is believed that there is an ongoing and active U.S. government investigation looking into Joonko.
Raz claims in the lawsuit, filed with Delaware's Court of Chancery, that the company is refusing to advance the money despite obligations established in its bylaws, an indemnification agreement and Delaware law.
The company was established in 2016 and had secured $38 million in funding over the years, including from Insight Partners and Vertex. While Joonko’s headquarters were based in Israel, it was incorporated in Delaware in July 2016. The company, which employed around 50 people at its peak, developed a solution that assisted companies in achieving their diversity, equity, and inclusion goals.
According to the lawsuit, Joonko Chief Operating Officer Ilon Band emailed Raz's counsel on August 31 and said: "Given the circumstances, we do not believe that under the terms of the indemnification agreement the company is obligated to pay the invoices you forwarded. Attached for your reference is the company's D&O Insurance (recently expired)."
In a reply from October, Raz’s lawyer said that therefore she would take the matter to court to receive the advancement.
An investigation was initiated last year after the company's investors became suspicious of Raz, leading them to request the hiring of a Chief Financial Officer and a Chief Operating Officer for the company, positions that had not previously existed. Raz had been avoiding appointing these senior officials for months until she finally complied with the board's demands.
“The company was recently made aware of misstatements in the financial reporting of the company. 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 in a statement last June. “As a result, the board and other executive officers of the company carried out an extensive review of the CEO’s performance. The CEO was found to have engaged in egregious, unethical, and fraudulent conduct, which caused harm to the company and its shareholders. The CEO was confronted with the findings of the investigation, and she voluntarily resigned in response. The extent of the situation remains under investigation and next steps are under consideration.”
