NEW YORK, April 17: The former chief executive and chief financial officer of iLearningEngines, a provider of AI-powered business automation technology, has been indicted on charges that he defrauded investors and lenders by fabricating “virtually all” of the bankrupt company’s customer relationships and revenue.
Former CEO Puthugramam Chidambaran and former CFO Syed Farhan Ali Naqvi, who founded iLearningEngines in 2010, were charged in a 10-count indictment with operating a continuing financial crimes enterprise, securities fraud, wire fraud, and conspiracy to commit securities fraud and wire fraud.
The indictment was announced Friday in federal court in Brooklyn, New York. According to prosecutors, Chidambaran, 57, was arrested in Potomac, Maryland, where he lives, and Naqvi, 44, of Houston, was arrested in San Jose, California. Criminal enterprise charges carry a maximum penalty of life in prison.
Lawyers for the defendants did not respond to requests for comment.
Prosecutors said iLearning advertised itself as an artificial intelligence-driven digital education company with a “ready-to-use AI platform” and claimed it made money by selling licenses to its education and training platform to customers, primarily healthcare companies and schools.
The indictment alleges that the defendants used forged and fake contracts to make iLearning’s customers appear to be genuine and to generate revenue by “round-trip” transfers of investor and lender funds, that is, sending money to purported customers who then returned it to iLearning.
At least 90% of iLearning’s $421 million in reported revenue in 2023 was fabricated, according to the indictment.
“While the defendants touted iLearning as a way to revolutionize training and education through AI, the truly artificial part of the defendants’ story was iLearning’s customers and revenue,” Brooklyn U.S. Attorney Joseph Nocera Jr. said in a statement.
The company went public in April 2024 and had a market capitalization of $1.5 billion on the Nasdaq market until prominent short sellers questioned the reported earnings.
The company filed for Chapter 11 protection against its creditors in December 2024 and had its case converted to Chapter 7 liquidation in March 2025.
