Puthugramam “Harish” Chidambaran, founder and former Chief Executive Officer of iLearningEngines, Inc., and Sayyed Farhan Ali “Farhan” Naqvi, the company’s former Chief Financial Officer, were charged on Apr. 17 in Brooklyn federal court with operating a continuing financial crimes enterprise and other offenses related to a multi-year scheme to defraud investors and lenders. Both men were arrested the same morning—Chidambaran in Potomac, Maryland, and Naqvi in San Jose, California—and are expected to appear later in federal court in the Eastern District of New York.
The indictment alleges that Chidambaran and Naqvi deceived retail and institutional investors by making false statements about iLearning’s financial performance. The case is significant as it highlights alleged exploitation of investor interest in artificial intelligence technologies for personal gain. "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," said United States Attorney Joseph Nocella Jr.
According to prosecutors, iLearning claimed substantial revenues from selling licenses for its AI-driven business automation platforms. The company reported $421 million in revenue for 2023 before going public on NASDAQ under ticker symbol “AILE.” After raising $60 million through loans from New York City banks following its public listing—which led to a market capitalization of about $1.5 billion—the indictment states that most customer relationships were fabricated using sham contracts signed by employees or associates posing as clients.
To make these fake contracts appear legitimate, funds received from lenders or investors were allegedly sent through accounts controlled by associates before being returned to iLearning—a process described as "round tripping"—with transactions exceeding $144 million over several years. An August 2024 investment research report questioned these revenues; after publication, iLearning's stock value fell sharply before it filed for bankruptcy later that year.
Both Chidambaran and Naqvi reportedly benefited financially prior to the collapse: Chidambaran received more than $500 million worth of stock plus restricted units valued at approximately $12.5 million; Naqvi was awarded stock worth around $11.2 million along with cash payouts covering tax liabilities totaling nearly $4.5 million.
The U.S. Attorney for the Eastern District of New York supports community outreach efforts according to its official website. The office maintains locations in Brooklyn and Central Islip per its website, handling both criminal prosecutions and civil matters representation as stated online. Breon Peace leads this office according to official information, which covers Brooklyn, Queens, Staten Island, Nassau County, and Suffolk County as indicated online.
If convicted on all charges—including operating a continuing financial crimes enterprise—the defendants each face at least ten years up to life imprisonment.
