Two Indian American executives of iLearning, a Maryland-based technology company that marketed itself as an “out-of-the-box AI platform,” have been charged with running a multimillion-dollar scam to defraud investors and lenders.
A ten-count indictment charging Puthugramam “Harish” Chidambaran, the founder and former CEO of iLearning Engines, and Sayyed Farhan Ali “Farhan” Naqvi, its former CFO, was unsealed in a federal court in Brooklyn on April 17.
The charges arise from the defendants’ years-long scheme to defraud retail and institutional investors in iLearning and to obtain financing for the company through materially false and misleading statements about the company’s financial performance, according to a media release from U.S. Attorney’s Office, Eastern District of New York.
Chidambaran, 57, was arrested on April 17 morning in Potomac, Maryland. Naqvi, 44, was arrested the same day in San Jose, California. Both defendants will appear in federal court in the Eastern District of New York at a later date.
“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,” Joseph Nocella, Jr., U.S. Attorney for the Eastern District of New York, stated. “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.”
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As alleged in the indictment, iLearning claimed to earn revenue primarily by selling licenses for its platforms to customers, and the company reported rapidly growing revenues that reached $421 million in 2023.
In April 2024, iLearning became a publicly traded company. Following its going-public transaction, iLearning’s shares began trading on the NASDAQ and the company quickly achieved a market capitalization of approximately $1.5 billion.
Unbeknownst to investors and lenders, however, the defendants inflated iLearning’s revenues through an intricate web of sham contracts with purported customers—often purportedly worth tens of millions of dollars per year, the indictment alleged.
In August 2024, an investment research firm issued a report alleging that iLearning had materially misrepresented its revenue, including by attributing a significant portion of its reported income to undisclosed related-party transactions.
Following the publication of that report, iLearning’s stock price declined precipitously, erasing a substantial portion of its market value. iLearning ultimately filed for Chapter 11 bankruptcy protection in the District of Delaware in December 2024, and the proceedings were later converted to a Chapter 7 liquidation in 2025, marking the collapse of the company.
Prior to iLearning’s collapse, Chidambaran received more than $500 million worth of iLearning common stock in connection with iLearning’s going-public transaction. Likewise, Naqvi was awarded iLearning common stock worth approximately $11.2 million, and iLearning paid out nearly $4.5 million in cash to cover his tax liabilities.