NRI PULSE STAFF REPORT
New York, NY, April 19, 2026: A tech startup once touted as a rising force in artificial intelligence is now at the center of a sweeping federal criminal case, with prosecutors alleging that much of its business existed only on paper.
Federal authorities have indicted Puthugramam “Harish” Chidambaran, founder and former CEO of iLearning, and the company’s CFO Sayyed Farhan Ali “Farhan” Naqvi, on multiple counts including securities fraud, wire fraud, and conspiracy. The charges stem from what the U.S. Department of Justice describes as a years-long scheme to mislead investors and lenders by fabricating revenue and customer relationships.
According to prosecutors, iLearning promoted itself as a cutting-edge AI company capable of “generating and infusing insights in the flow-of-work to drive mission critical business outcomes.” The company claimed explosive growth, reporting more than $420 million in revenue in 2023, and went public in 2024.
But investigators now allege that “virtually all” of those revenues and customer relationships were fabricated.
“As alleged, the defendants exploited investor excitement over the AI boom and presented a rosy financial outlook… built on lies,” U.S. Attorney Joseph Nocella Jr. said in a statement. “The truly artificial part of the defendants’ story was iLearning’s customers and revenues.”
The indictment marks a dramatic fall for a company that had ridden the wave of investor enthusiasm around artificial intelligence. Founded more than a decade ago and later rebranded as an AI-driven enterprise platform, iLearning positioned itself as a provider of training and workflow automation solutions for large organizations.
Its rapid rise, however, had drawn scrutiny even before criminal charges were filed. Investor lawsuits alleged that the company misled shareholders through inflated financial disclosures tied to its public filings. In one federal complaint, investors questioned how a relatively unknown firm could report hundreds of millions in revenue while maintaining limited cash reserves and significant debt.
Court filings and analyst reports also pointed to a little-understood “technology partner” that allegedly accounted for a large share of iLearning’s revenue. The identity and role of that partner were never clearly disclosed, raising further questions among investors and short sellers.
A critical turning point came when a short-seller report publicly accused the company of inflating its revenues and misrepresenting its business operations. Chidambaran denied those claims at the time, calling them misleading and stating that the company would conduct an internal review through a special committee.
Even as the company pushed back, its financial and operational challenges deepened. iLearning reported a cybersecurity incident and mounting financial strain, and later sought protection under Chapter 11 bankruptcy in late 2024, according to court records.
The legal battle has also taken unexpected turns. In March 2026, a federal court dismissed a securities fraud class action against Chidambaran and other executives, finding that investors had not sufficiently demonstrated fraud under civil standards. The criminal indictment, however, introduces a higher-stakes proceeding, where prosecutors typically rely on broader evidence such as internal communications, financial trails, and witness testimony.
Legal experts note that it is not uncommon for civil cases to falter while criminal investigations proceed, as the burden of proof and available evidence can differ significantly.
The charges against Chidambaran and Naqvi include not only fraud and conspiracy counts but also operating what prosecutors describe as a “continuing financial crimes enterprise,” a designation that suggests an organized and sustained effort to deceive investors.
If convicted, the defendants could face substantial prison time.
