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Executives of AI Firm iLearning Charged with Fraud for Faking $1.5B Valuation
Chidambaran and Naqvi accused of fabricating customer contracts and revenues to defraud investors
Apr. 19, 2026 at 11:00pm
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The shattered remains of iLearning's fraudulent financial structure expose the true cost of the executives' alleged scheme to exploit investor excitement over AI technology.NYC TodayTwo executives of the AI technology company iLearningEngines, Inc. have been charged with a litany of fraud charges related to their scheme to defraud retail and institutional investors. Puthugramam Chidambaran, the founder and former CEO, and Sayyed Farhan Ali Naqvi, the former CFO, are accused of fabricating customer relationships and revenues to inflate iLearning's valuation to $1.5 billion before the company's collapse in 2024.
Why it matters
This case highlights the risks of the AI technology boom, where some companies have allegedly exploited investor excitement to present a false financial picture. The charges against the iLearning executives allege a complex fraud that undermined the integrity of financial markets and cost investors millions.
The details
According to the indictment, Chidambaran and Naqvi inflated iLearning's revenues through an intricate web of sham contracts with purported customers, often signed by iLearning employees or family members posing as executives. They also created fake information about these customers, including building a website for a shell entity, to deceive investors and lenders. The defendants are accused of 'round tripping' money received from lenders and investors, sending funds to purported customers who would then send the money back to iLearning.
- In April 2024, iLearning became a publicly traded company.
- In August 2024, an investment research firm issued a report alleging that iLearning had materially misrepresented its revenue.
- In December 2024, iLearning filed for Chapter 11 bankruptcy protection, which was later converted to a Chapter 7 liquidation in 2025.
The players
Puthugramam Chidambaran
The 57-year-old founder and former Chief Executive Officer of iLearningEngines, Inc.
Sayyed Farhan Ali Naqvi
The 44-year-old former Chief Financial Officer of iLearningEngines, Inc.
iLearningEngines, Inc.
A Bethesda, Maryland-based technology company that marketed itself as an AI platform for business automation solutions.
What they’re saying
“As alleged, the defendants exploited investor excitement over the AI boom and presented a rosy financial outlook to investors and lenders that was built on lies. 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.”
— Joseph Nocella, Jr., United States Attorney for the Eastern District of New York
What’s next
The judge will decide on Tuesday whether to allow Chidambaran and Naqvi to be released on bail.
The takeaway
This case highlights the need for greater scrutiny and oversight of companies claiming to be at the forefront of emerging technologies like AI, as some may be exploiting investor enthusiasm to perpetrate financial fraud.
