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By Jonathan Stempel<\/p>\n
NEW YORK, April 17 (Reuters) – The former chief executive and chief financial officer of iLearningEngines, which provided AI-driven business automation technology, were \u200cindicted on charges they defrauded investors and lenders by fabricating “virtually all” of \u200cthe now-bankrupt company’s customer relationships and revenue.<\/p>\n
Former CEO Puthugramam Chidambaran, who founded iLearningEngines in 2010, and ex-CFO \u200bSayyed Farhan Ali Naqvi were charged in a 10-count indictment with running a continuing financial crimes enterprise, securities fraud, wire fraud, and conspiracy to commit securities fraud and wire fraud.<\/p>\n
The indictment was made public on Friday in the Brooklyn, New York, federal court. Chidambaran, \u200c57, was arrested in Potomac, \u2060Maryland, where he lives, while Naqvi, 44, of Houston, was arrested in San Jose, California, prosecutors said. The criminal enterprise charge carries a \u2060maximum sentence of life in prison.<\/p>\n
Lawyers for the defendants did not immediately respond to requests for comment.<\/p>\n
Prosecutors said iLearning marketed itself as an artificial intelligence-driven digital education company with an “out-of-the-box \u200bAI platform,” \u200band claimed to earn revenue mainly by \u200bselling licenses for its educational and \u200ctraining platforms to customers, including healthcare companies and schools.<\/p>\n
According to the indictment, the defendants used forged sham contracts to make it seem that iLearning’s customers were real, and used “round trip” transfers of investor and lender funds — meaning they sent money to purported customers, who then returned it to iLearning — to manufacture revenue.<\/p>\n
At least 90% of iLearning’s $421 \u200cmillion of reported revenue in 2023 was fabricated, \u200bthe indictment said.<\/p>\n
“While the defendants pitched iLearning as a \u200bway to revolutionize training and \u200beducation through AI, the truly artificial part of the defendants\u2019 story \u200cwas iLearning’s customers and revenues,\u201d U.S. Attorney Joseph \u200bNocella Jr. in Brooklyn \u200bsaid in a statement.<\/p>\n
The company went public in April 2024, and its market value on the Nasdaq peaked at $1.5 billion before a prominent short-seller questioned \u200bits reported revenue.<\/p>\n
The company filed \u200cfor Chapter 11 protection from creditors in December 2024, and converted that \u200bcase to a Chapter 7 liquidation in March 2025.<\/p>\n
(Reporting by Jonathan Stempel \u200bin New York; Editing by Bill Berkrot)<\/p>\n<\/p><\/div>\n