CEO of AI $1.5 Billion Startup Accused of Massive Fraud by Justice Department
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The US Department of Justice has accused the CEO and CFO of iLearning Engines, a $1.5 billion AI startup, of massive fraud, alleging they faked customer relationships and revenues. The defendants allegedly exploited investor excitement over AI to dupe investors into believing the company was a fast-growing AI upstart.
The US Department of Justice has charged the CEO and CFO of iLearning Engines, a $1.5 billion AI startup, with securities and wire fraud. Puthugramam 'Harish' Chidambaran and Sayyed Farhan Ali 'Farhan' Naqvi allegedly faked customer relationships and revenues since January 2019. The company claimed to be an 'out-of-the-box AI platform' that empowered customers to 'productize' their institutional knowledge. In reality, the DoJ says, the vast majority of the company's on-paper customers and revenue were fabricated. Chidambaran and Naqvi were arrested in Maryland and California, respectively. They allegedly scraped in millions in stock options, salary, and bonuses, with Chidambaran receiving over $500 million in common stock. The alleged fraud is significant, with the company posting $421 million in revenue in 2023 based on supposed AI licenses sold to enterprise customers. The FBI's latest Internet Crime Report identified over 22,000 complaints related to AI fraud in 2025, with estimated losses of around $900 million.
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