NEW YORK (Covering Katy News) — A Fulshear resident who served as chief financial officer of a Maryland-based artificial intelligence company has been indicted on federal fraud charges alleging he and the company's founder fabricated the vast majority of the firm's customers and revenues — inflating reported income by hundreds of millions of dollars — before the company collapsed into bankruptcy.
Sayyed Farhan Ali Naqvi, 44, of the Cross Creek Ranch community in Fulshear, was arrested April 17 in San Jose, California. He is charged alongside Puthugramam "Harish" Chidambaran, 57, of Potomac, Maryland, the founder and former CEO of iLearningEngines Inc.
Ten counts, potential life sentence
The indictment, unsealed in federal court in the Eastern District of New York, charges both men with running a continuing financial crimes enterprise, conspiracy to commit securities fraud, securities fraud, conspiracy to commit wire fraud, and wire fraud. The continuing financial crimes enterprise count carries a mandatory minimum of 10 years in prison and a maximum sentence of life.
At least 90% of reported revenue was fake
Prosecutors allege the two men, beginning in January 2019, inflated iLearningEngines' revenues by hundreds of millions of dollars per year through sham contracts with fake customers — many of them shell entities controlled by iLearning employees, friends, or associates of the defendants. At least 90% of the company's reported $421 million in 2023 revenue was fabricated, according to the indictment.
"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," U.S. Attorney Joseph Nocella Jr. said.
Company went public, reached $1.5 billion value — then collapsed
iLearningEngines went public in April 2024, with its stock trading on the Nasdaq under the ticker symbol "AILE" and reaching a peak market capitalization of approximately $1.5 billion. The alleged fraud began to unravel in August 2024 when an investment research firm accused the company of fabricating customers and revenues, sending the stock down more than 50% in a single day.
Naqvi and Chidambaran resigned Dec. 23, 2024. Payments from all sham customers ceased almost immediately afterward. The company filed for Chapter 11 bankruptcy protection shortly after and converted the case to a Chapter 7 liquidation in March 2025, leaving hundreds of creditors unpaid and more than $50 million in outstanding liabilities.
Naqvi personally collected millions before the collapse
The indictment claims Naqvi received more than $650,000 in salary and bonuses between 2023 and 2024, stock worth approximately $11.2 million following the public offering, and more than $4.4 million in cash from iLearning to cover his resulting tax liability.