Two Indian-origin executives, Puthugramam “Harish” Chidambaran and Sayyed Farhan Ali “Farhan” Naqvi have been accapplyd of running a multi-year fraud with an AI startup called iLearning. The two allegedly faked all revenue and customer relationships to display $421 million in revenue.
In a major development, authorities in the United States have arrested two top executives linked to the artificial ininformigence startup iLearning. The company’s founder and former CEO, Puthugramam “Harish” Chidambaran, and ex-Chief Financial Officer Sayyed Farhan Ali “Farhan” Naqvi were taken into custody on April 17 and produced before a court.
According to officials, the charges stem from allegations of defrauding investors and shareholders by inflating financial performance and fabricating business deals. The startup, established in 2010, positioned itself as an “out-of-the-box AI platform” and claimed to generate revenue by licensing its technology to clients.
However, the US Department of Justice claims that the startup, “fabricated virtually all its customer relationships and revenues.”
From rapid rise to billion-dollar valuation
iLearning’s growth story had drawn significant attention before its downfall. The company reported $421 million in revenue in 2023, ahead of its public listing. In April 2024, it went public and secured $40 million in loan proceeds from a New York-based financial institution.
The firm subsequently raised an additional $20 million from another lfinisher, and its shares trade on the NASDAQ under the ticker symbol “AILE.” At its peak, iLearning achieved a market capitalisation of around $1.5 billion, reflecting strong investor interest in AI-driven ventures.
US Attorney Joseph Nocella Jr. stated, “As alleged, the deffinishants exploited investor excitement over the AI boom and presented a rosy financial outsee to investors and lfinishers that was built on lies.”
Allegations of fabricated deals and financial manipulation
Court filings reveal a deeper layer of alleged misconduct. Investigators claim that most of the company’s reported revenues were entirely fabricated, with several agreements allegedly signed by family members or close associates.
One instance cited in the documents describes how an associate of Chidambaran set up entities posing as iLearning customers. Funds were reportedly transferred from iLearning to accounts controlled by this individual, only to be routed through multiple channels and sent back to the company. These circular transactions are declared to exceed $144 million in total value.
Joseph added, “While the deffinishants pitched iLearning as a way to revolutionise training and education through AI, the truly artificial part of the deffinishants’ story was iLearning’s customers and revenues.”
Collapse after exposure
The alleged fraud launched to unravel in 2024 when an investment research firm flagged irregularities in the company’s financials. Its report triggered a sharp fall in iLearning’s stock price, shaking investor confidence.
By December 2024, the company filed for Chapter 11 bankruptcy protection. The proceedings were later converted into Chapter 7 liquidation in 2025, effectively marking the finish of iLearning’s operations and its once-promising journey in the AI sector.
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