Ex-iLearningEngines CEO, CFO Arrested In Multi-Year Revenue Fraud Scheme

India-West News Desk

SAN JOSE, CA – Former iLearningEngines Inc. chief executive Puthugramam “Harish” Chidambaran and former chief financial officer Sayyed Farhan Ali Naqvi have been charged in connection with an alleged years-long scheme to mislead investors and lenders through fabricated revenue, sham customer contracts and false financial statements.

The Department of Justice said that the defendants “exploited investor excitement over the AI boom and presented a rosy financial outlook to investors and lenders that was built on lies.” He added that “the truly artificial part of the defendants’ story was iLearning’s customers and revenues.”

Chidambaran, 57, was arrested in Potomac, Maryland, while Naqvi, 44, was arrested in San Jose, California. Both are expected to appear later in federal court in New York.

According to prosecutors, iLearningEngines created an extensive network of purported customers linked to employees, associates and relatives. Some contracts were allegedly signed by individuals posing as executives of outside companies, while fake websites and other records were created to make the relationships appear legitimate.

Prosecutors also allege that investor and loan funds were routed through outside accounts and later sent back to the company, allowing the money to be recorded as revenue. Authorities said the value of those transactions exceeded $144 million.

Founded in 2010 and based in Bethesda, Maryland, iLearningEngines marketed artificial intelligence-driven automation tools for businesses. The company went public in April 2024 and began trading on Nasdaq under the ticker AILE. It later reached an approximate market value of $1.5 billion.

According to the indictment, the company also secured $60 million in loans around the time of its public listing.

The company came under scrutiny in August 2024 after an investment research report questioned its reported revenue and cited undisclosed related-party transactions. Its stock price then fell sharply.

iLearningEngines filed for Chapter 11 bankruptcy protection in December 2024. The case was later converted to a Chapter 7 liquidation in 2025.

Before the company’s collapse, prosecutors said Chidambaram received more than $500 million worth of company stock and additional restricted stock units valued at about $12.5 million. Naqvi allegedly received stock worth about $11.2 million, while the company also paid nearly $4.5 million in cash to cover his tax liabilities.

The indictment includes charges of securities fraud, wire fraud and operating a continuing financial crimes enterprise. If convicted on the most serious charge, the defendants face a mandatory minimum sentence of 10 years in prison and a maximum sentence of life.