The former chief executive and chief financial officer of iLearningEngines, which provided AI-driven business automation technology, were indicted on charges they defrauded investors and lenders by fabricating “virtually all” of the now-bankrupt company’s customer relationships and revenue.
Former CEO Puthugramam Chidambaran, who founded iLearningEngines in 2010, and ex-CFO Sayyed 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.
The indictment was made public on April 17 in the Brooklyn, New York, federal court. Chidambaran, 57, was arrested in Potomac, Maryland, where he lives, while Naqvi, 44, of Houston, was arrested in San Jose, California, prosecutors said. The criminal enterprise charge carries a maximum sentence of life in prison.
Lawyers for the defendants did not immediately respond to requests for comment.
Prosecutors said iLearning marketed itself as an artificial intelligence-driven digital education company with an “out-of-the-box AI platform,” and claimed to earn revenue mainly by selling licenses for its educational and training platforms to customers, including healthcare companies and schools.
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.
At least 90% of iLearning’s $421 million of reported revenue in 2023 was fabricated, the indictment said.
“While the defendants pitched iLearning as a way to revolutionize training and education through AI, the truly artificial part of the defendants’ story was iLearning’s customers and revenues,” U.S. Attorney Joseph Nocella Jr. in Brooklyn said in a statement.
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 its reported revenue.
The company filed for Chapter 11 protection from creditors in December 2024, and converted that case to a Chapter 7 liquidation in March 2025.