Indian-Origin Founders’ US AI Startup Busted in bug Fraud Case

Artificial Intelligence has been trembling employees in the tech industry, as its presence gets consolidated with more investments into the new technology.

Amid the huge investments into it, two Indian-origin executives, Puthugramam ‘Harish’ Chidambaram and Sayyed Farhan Ali ‘Farhan’ Naqvi, were taken into custody on accusations of executing a multi-layer fraud through their AI startup iLearning. They allegedly fabricated all the revenue and customer relationships to show $421 million in revenue.

Harish Chidambaram, the company’s founder and former CEO, Farhan Naqvi, ex-CFO were arrested on April 17 and produced before a court. The fraud was flagged in 2024 by an investment research firm. The research firm’s report triggered a sharp decline in iLearning’s stock price. Founded in 2010 as an ‘out-of-the-box AI platform’, the company attracted investments claiming to generate revenue by licensing its technology to clients.

In 2023, ahead of its public listing, the company reported $421 million in revenue. The next year, it went public and secured $40 million as loan proceeds from a New York-based financial institution.

Gaining the trust of another lender, iLearning raised an additional $20 million and since then, the company documents showed a strong investor interest in AI-driven projects. The company got listed on NASDAQ under the ticker symbol ‘AILE’ and during its peak, iLearning reached a market capitalisation of nearly $1.5 billion.

However, the US Department of Justice stated: that the company fabricated all of its customer relationships and revenues. The company exploited the investor interest on AI ventures.

The court hearings uncovered the alleged misconduct of the company and stated that many of its agreements were signed by family members or close associates. One of Chidambaran’s associates completely helped the company by setting up a few entities, which were shown as iLearning customers.

Reportedly, funds were first transferred from iLearning to accounts controlled by the associated which were then routed through multiple channels and re-routed to the company. The worth of these circular transactions exceeds $144 million.

In December 2024, iLearning filed for Chapter 11 bankruptcy protection and in 2025, the proceedings were converted into Chapter 7 liquidation, ending the company’s operations.