Ex-CEO, ex-CFO of bankrupt AI company charged with fraud

> they defrauded investors and lenders by fabricating "virtually all" of the now-bankrupt company's customer relationships and revenue.

> According to the indictment, the defendants used forged sham contracts to make it seem that iLearning's customers were real, and used "round trip" transfers of investor and lender funds -- meaning they sent money to purported customers, who then returned it to iLearning -- to manufacture revenue.

> At least 90% of iLearning's $421 million of reported revenue in 2023 was fabricated, the indictment said.

> The company went public in April 2024, and its market value on the Nasdaq peaked at $1.5 billion before a prominent short-seller questioned its reported revenue.

For the record the short sellers who blew up the fraud were Hindenburg Research. This is the second AI company they've discovered that is a scam, the other being Super Micro with their chip-selling scam: https://www.forbes.com/sites/tylerroush/2026/03/20/super-mic...

Unfortunately there is a real chance they get pardoned or just their cars dropped for a small sum of 1-5 million dinner.

iLearningEngines .. hindenburg did some research ILearningEngines: An AI SPAC with Artificial Partners and Artificial Revenue (2 years ago) https://news.ycombinator.com/item?id=41390619

Play with fire, and you get burned...

These scams are all too frequent today, and putting these guys and others like them in prison would act as a deterrent.

We'll see if our system can actually hold any white collar criminals accountable though...

If they arrest everyone who does a wash transaction to generate the appearance of revenue there aren't going to be many founders left standing in 2026.

Using the right channels, they can buy a pardon. Let's see how it unfolds.

It appears what really ended their little scam was the $421 million of reported revenue based on complete lies.

Because lying to investors about product hasn't been really an issue lately, even Intel ~5 years ago did some presentations that were a complete fantasy back when they were desperate to keep their stock value but could not produce a chip smaller than 14nm.

If they prosecute CEOs based on lies to investors other than accounting, almost all AI startups would go down.

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