NEW YORK – Monday, April 20, 2026 – Puthugramam Chidambaran, the 57-year-old founder and former CEO of iLearningEngines, Inc., has been arrested and charged in connection with an elaborate $421 million corporate and securities fraud scheme. The charges, unsealed Friday by the U.S. Attorney’s Office for the Eastern District of New York, allege that Chidambaran orchestrated a years-long plot to fabricate virtually all of his company’s revenue, defrauding investors and lenders.
Chidambaran, a resident of Potomac, Maryland, faces a ten-count indictment that includes running a continuing financial crimes enterprise, conspiracy to commit securities fraud, securities fraud, conspiracy to commit wire fraud, and wire fraud. His arrest took place on Friday, April 17, 2026, in Potomac, Maryland. Co-conspirator Sayyed Farhan Ali “Farhan” Naqvi, the former CFO of iLearningEngines, was also arrested in San Jose, California.
The Charges Against Puthugramam Chidambaran
Prosecutors allege that Puthugramam Chidambaran, also known as “Harish Chidambaran,” was the architect of a sophisticated scheme that ran from approximately January 2019 to April 2025. The core of the fraud involved fabricating iLearningEngines’ customer relationships and revenue to present a false image of rapid growth and financial health, particularly exploiting the burgeoning excitement around artificial intelligence (AI) technologies.
The indictment details how Chidambaran and Naqvi allegedly created an intricate web of sham contracts with purported customers, often claiming tens of millions of dollars in annual revenue. These agreements were frequently signed by iLearningEngines employees or their family members posing as executives of the fake customer companies. In a particularly brazen tactic, Chidambaran is accused of directing an associate to incorporate and open bank accounts in the names of several of these fictitious customers. Millions of dollars were then “round-tripped” – transmitted from iLearningEngines to these accounts, routed through other controlled entities, and ultimately sent back to iLearningEngines, creating the illusion of legitimate business operations. These round-trip transactions alone exceeded $144 million.
Furthermore, the defendants allegedly convinced friends and associates to enter into these sham contracts and to lie to auditors, potential investors, and lenders, all to maintain the elaborate deception.
Scale of the Deception: $421 Million Fabricated Revenue
The scale of the alleged fraud is staggering. The indictment claims that at least 90% of iLearningEngines’ reported $421 million revenue in 2023 was entirely fabricated. The company, which went public on Nasdaq in April 2024 under the ticker “AILE,” briefly achieved a market valuation of approximately $1.5 billion based on these false pretenses.
Puthugramam Chidambaran personally reaped significant benefits from the scheme. He received over $500 million worth of iLearningEngines common stock during the company’s going-public transaction and an additional $12.5 million in restricted stock units in August 2024, even as the company’s stock price was in freefall. He also collected more than $700,000 in salary and bonuses between 2023 and 2024.
The victims include numerous retail and institutional investors who poured money into iLearningEngines, believing in its misrepresented financial performance. Lenders who provided $60 million in loan proceeds to the company based on false financial statements also suffered significant losses. The company’s eventual collapse into Chapter 7 liquidation in 2025 underscores the profound financial damage inflicted upon those who invested in or lent to iLearningEngines.
Who Is Puthugramam Chidambaran?
Puthugramam Chidambaran, 57, founded iLearningEngines in 2010. The company positioned itself as a provider of AI-driven business automation solutions, particularly in the corporate and educational learning sectors. He served as its Chief Executive Officer until his resignation on December 23, 2024, shortly before the company filed for bankruptcy.
Investigation Details
The charges were announced by the United States Attorney’s Office for the Eastern District of New York and the Federal Bureau of Investigation (FBI), New York Field Office. Assistant United States Attorneys Joshua Dugan and Kamil R. Ammari are prosecuting the case.
The intricate fraud began to unravel in August 2024, when an investment research firm, Hindenburg Research, published a damning report. The report alleged that iLearningEngines had materially misrepresented its revenue, highlighting undisclosed related-party transactions and claiming that “nearly all” of the company’s revenue and expenses in 2022 and 2023 were channeled through an undisclosed “Technology Partner” (later identified as UAE-based Experion Technologies). This report triggered a precipitous decline in iLearningEngines’ stock price, erasing a substantial portion of its market value.
“This case highlights the deceptive practices employed to create a facade of success, ultimately harming countless investors who believed in the company’s false claims of AI-driven growth.”
What Happens Next
Following his arrest on Friday, Puthugramam Chidambaran was scheduled to appear in federal court in the District of Maryland. Naqvi was slated for an appearance in the Northern District of California. Both defendants will subsequently appear in federal court in the Eastern District of New York at a later date to face the serious charges. The criminal enterprise charge alone carries a maximum sentence of life in prison, reflecting the severity of the alleged financial crimes.
As the legal process unfolds, further details regarding trial dates, potential asset freezes, and the full extent of victim impact are expected to emerge. A class-action lawsuit has already been filed on behalf of investors who purchased iLearningEngines stock between April 22, 2024, and August 28, 2024, alleging that the company made false and misleading statements.
Protecting Yourself: Recognizing the Red Flags
The iLearningEngines case serves as a stark reminder of critical red flags investors should watch for to protect themselves from corporate fraud. The alleged scheme exhibited several warning signs:
- Lack of Transparency: Despite claiming massive revenue, iLearningEngines had no clear industry presence or named major customers.
- Undisclosed Related-Party Transactions: A significant portion of reported revenue flowing through an undisclosed “Technology Partner” that the company explicitly denied was a related party should raise immediate suspicion.
- Discrepancies in Financials: Vast differences between reported market-specific revenue (e.g., $216 million in India) and actual subsidiary filings (e.g., $853,471) are clear indicators of potential fabrication.
- “Round-Trip” Transactions: The practice of sending funds to purported customers only to have them returned to the company is a classic method for manufacturing fake revenue.
- Exploitation of Hype: Prosecutors noted the defendants “exploited investor excitement over the AI boom.” Investors should exercise extreme caution when companies in hot sectors lack verifiable fundamentals.
- Questionable Auditors: Concerns about the integrity of a company’s auditor, such as Marcum LLP in this instance, can be a major red flag for financial reporting issues.
For more information on identifying and avoiding investment scams, visit related fraud investigations. Investors are urged to conduct thorough due diligence and seek independent verification of financial claims, especially in rapidly growing or highly hyped sectors.
