Former chief executive and chief financial officer of iLearningEngines, an AI-driven business automation firm, have been indicted for allegedly defrauding investors and lenders by inventing nearly all of the now-bankrupt company’s customer relationships and revenue.
Puthugramam Chidambaran, 57, who founded iLearningEngines in 2010, and ex-CFO Sayyed Farhan Ali Naqvi, 44, face a 10-count indictment in Brooklyn federal court for operating a continuing financial crimes enterprise, securities fraud, wire fraud, and related conspiracies.
The charges, unsealed Friday, carry a maximum life sentence for the criminal enterprise count. Chidambaran was arrested in Potomac, Maryland, while Naqvi was nabbed in San Jose, California. Lawyers for the duo did not immediately respond to comment requests.
Prosecutors alleged iLearningEngines posed as an AI-powered digital education provider with an “out-of-the-box AI platform,” claiming revenue from licensing deals to healthcare firms and schools.
The indictment detailed how the executives forged sham contracts to fake customers and executed “round-trip” fund transfers—sending investor and lender money to supposed clients who returned it—to inflate revenue.
At least 90% of the firm’s reported $421 million revenue in 2023 was fabricated, according to court documents.
“While the defendants pitched iLearning as a way to revolutionise training and education through AI, the truly artificial part was iLearning’s customers and revenues,” Brooklyn U.S. Attorney Joseph Nocella Jr. stated.
iLearningEngines went public on Nasdaq in April 2024, with its value peaking at $1.5 billion before a short-seller exposed revenue doubts. It filed for Chapter 11 bankruptcy in December 2024, converting to Chapter 7 liquidation in March 2025.
