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Indian-origin executives charged in U.S. fraud case
Prosecutors allege the company faked revenues through sham deals and circular transactions worth over $144 million.
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Malvika Choudhary - Fri, 17, Apr 2026
- 17:35 EDT
- 23
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Representative Image / Pexels
Two former Indian-origin executives of Nasdaq-listed iLearningEngines have been charged by a federal court for their alleged involvement in a multi-year scheme to defraud investors and lenders.
Puthugramam “Harish” Chidambaran, 57, the company’s founder and chief executive officer, and Sayyed Farhan Ali “Farhan” Naqvi, 44, its chief financial officer, face charges of securities fraud and wire fraud.
Also Read: Indian student visa holder convicted in U.S. fraud case
Both were arrested on April 17–Chidambaran in Potomac, Maryland, and Naqvi in San Jose, California–and are expected to appear in federal court in the Eastern District of New York.
According to the indictment, the fraud ran between 2019 and 2025, during which the company misled investors and lenders about its financial performance and customer base.
iLearning reported rapid growth, including $421 million in revenue in 2023. Investigators allege that more than 90 percent of this revenue was fabricated through sham contracts.
Prosecutors said the executives created fake customer entities—often involving employees, relatives and associates—and used them to sign contracts worth tens of millions of dollars. Some of these entities were supported by fabricated documentation, including websites, to appear legitimate.
Several of the purported customers were part of affiliated entities incorporated in India, the United Arab Emirates and the United States, presented as major clients generating significant revenue. In reality, these entities were allegedly controlled by the accused and used to inflate the company’s financials.
To sustain the scheme, funds raised from investors and lenders were allegedly routed through these entities and sent back to the company to create the appearance of real business income. Such “round-tripping” transactions ran into hundreds of millions of dollars, including about $145 million moved through accounts linked to a co-conspirator between 2021 and 2024.
The company went public in April 2024 through a SPAC transaction and began trading on Nasdaq under the ticker “AILE.” It also secured about $60 million in loans and reached a market value of around $1.5 billion at its peak.
In August 2024, an investment research report flagged concerns over its financial disclosures, triggering a stock crash of more than 50 percent in a single day, according to the indictment.
Prosecutors allege the executives continued to provide misleading information even after the report and attempted to conceal the scheme.
The company filed for Chapter 11 bankruptcy in December 2024, which was later converted into Chapter 7 liquidation in 2025.
Investigators said both executives profited significantly. Chidambaran received stock worth over $500 million and retained substantial control of the company, while Naqvi received millions in salary, stock and payments, including about $4.4 million to cover tax liabilities.
If convicted, both face a minimum of 10 years in prison and could face life sentences.
The charges are allegations, and the defendants are presumed innocent unless proven guilty.
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