An AI company once valued at $1.5 billion is now at the centre of a major fraud case in the United States. The matter relates to alleged fake revenue and misleading claims made to investors.
Two Indian-origin executives, Puthugramam Harish Chidambaran and Sayyed Farhan Ali Naqvi, have been arrested in the US over the alleged scam linked to startup iLearning.
According to the US Department of Justice, the company allegedly created false records involving revenue, customers and contracts. Investigators claim these details were used to attract investors.
iLearning claimed it generated $421 million in 2023 by selling AI platform licences. However, investigators later said many of those deals did not exist in reality.
In 2024, the company went public on NASDAQ under the ticker AILE. It soon reached a valuation of $1.5 billion and reportedly secured major funding from lenders.
Court documents now present a different picture. Several supposed customers were allegedly linked to family members, creating serious concerns about the company’s operations.
In one instance, funds were reportedly moved out and later returned to create false revenue trails. Investigators allege these round-trip transactions crossed $144 million.
US Attorney Joseph Nocella Jr. said the company took advantage of the AI investment boom. He alleged the financial story sold to markets was built on false claims.
A 2024 research report exposed the alleged fraud, leading to a sharp fall in the stock price. Later that year, iLearning filed for bankruptcy, which moved into liquidation in 2025.
The case has become another warning sign for investors during the AI boom. It highlights the risks of high valuations built on unverified claims and hype.
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