alt.hn

4/19/2026 at 10:30:19 PM

Ex-CEO, ex-CFO of iLearningEngines charged with fraud

 https://www.reuters.com/legal/government/ex-ceo-ex-cfo-bankrupt-ai-company-charged-with-fraud-2026-04-17/

by 1vuio0pswjnm7

4/19/2026 at 11:44:30 PM

> 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...

by randycupertino

4/20/2026 at 1:35:26 AM

> 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.

They should’ve instead “bought stake” in the customer companies and then asked them to use that money to buy their “product” like the normal trillion dollar companies do.

by darth_avocado

4/20/2026 at 2:05:00 AM

There is probably some phrase for describing this type of business activity. "If it's sophisticated it's actually legal" (no fault settlement). As a limited legalist this is actually the way it works and it's somewhat normal. A better lawyer provides better advice and steers company activity towards more defensible practice. If all the major ai players want to set money on fire for totally unmaintainable hobbies then so be it.

by wrqvrwvq

4/20/2026 at 2:22:50 AM

They should've asked their iLearningEngine AI to learn how to sophisticate their process.

by arikrahman

4/20/2026 at 3:14:35 AM

>Super Micro with their chip-selling scam

"Scam"

They sold chips to someone the government is mad at. Thats not really on the same level.

by protocolture

4/20/2026 at 1:06:26 AM

> "round trip" transfers of investor and lender funds -- meaning they sent money to purported customers, who then returned it to iLearning -

I thought a lot of public, high profile, AI adjacent sales were seller financed or financed by the seller investing in the purchaser. Is that the same thing?

by HWR_14

4/20/2026 at 1:17:42 AM

I think the issue here isn't that they did seller financing but rather there was not an actual buyer at all.

by dualityoftapirs

4/20/2026 at 3:09:14 AM

No. If I sent you $100 you'd probably send that $100 back, since you didn't expect then and have no reason to accept money from me. If I now go to a third party and don't tell them about how I sent you money, I have a legitimate transfer receipt for you sending me $100.

Its both a fraud on the third party, whom I have provided incomplete information. But also on you, who have become an unwitting accomlish in my scam, at least from the point of view of the third party.

by delusional

4/20/2026 at 2:42:32 AM

There was a similar case in Japan recently: alt.ai

This company purported to sell AI transcription service. Raised capital from notable local VCs. Did IPO in Oct 2023.

It turned out that more than 90% of its sales were fake. The CXOs were arrested and the company was liquidated last month.

Personally I never get the appeal of going public on fake sales. By design, the amount you need to fake grows bigger and bigger over time. So the collapse is inevitable.

by cloudbonsai

4/20/2026 at 3:24:44 AM

They take home a salary which they pay themselves and is very likely quite hefty.

by threethirtytwo

4/19/2026 at 11:47:56 PM

Supermicro isn't an "AI company", it's a Taiwanese origin x86 server/industrial/embedded hardware manufacturer with roots that go back 30 years.

by walrus01

4/20/2026 at 12:19:07 AM

Unfortunately, in 2026 even shoe companies are "AI companies"

by ethanwillis

4/20/2026 at 1:34:47 AM

Half a decade ago they were all blockchain companies. Before that I don’t remember, what was the buzzword, big data?

by onemoresoop

4/20/2026 at 1:49:38 AM

Extremely briefly: metaverse. But yeah before that big data and SaaS had quite a run.

by jordanb

4/20/2026 at 2:14:54 AM

"Cloud" for a bit too

by saghm

4/20/2026 at 12:24:36 AM

We will never learn our lesson. Humanity just keeps repeating the same mistakes. Remember Long Island Ice Tea / Blockchain?

by vrganj

4/20/2026 at 12:35:10 AM

A sucker is born everyday

by ares623

4/19/2026 at 10:48:24 PM

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

by gnabgib

4/20/2026 at 1:00:16 AM

Hindenburg Research is great. They also did the Nikola expose (that bunch of shysters who claimed to have electric truck technology where their truck couldn't even move under its own power so they filmed it rolling down a gentle slope).

For anyone wanting to get into the weeds about detecting accounting fraud, the book "Financial Shenanigans" has lots of historical examples of ways company executives have cooked the books to make their public company financial statements appear more appealing to investors than they actually are.

by shoo

4/20/2026 at 12:02:42 AM

Federal investigations always take forever.

by dmix

4/20/2026 at 12:23:33 AM

It's a real problem at this point. People still say "nobody went to jail for the GFC" even though over 200 people did in the US; it's just it took a decade and nobody actually paid attention a decade later when they went to jail.

by bandrami

4/20/2026 at 3:03:28 AM

> It's a real problem at this point. People still say "nobody went to jail for the GFC" even though over 200 people did in the US; it's just it took a decade and nobody actually paid attention a decade later when they went to jail.

Did over 200 people in the US go to jail for the GFC? I just tried looking and I only see 1 person in the US. Iceland had about 25.

by chollida1

4/20/2026 at 1:55:58 AM

For a multi-trillion dollar fuckup involving an entire industry... that seems low.

by dghlsakjg

4/20/2026 at 2:01:05 AM

TARP still has active IGs; if you know of criminal activity they missed you can report it to them.

by bandrami

4/20/2026 at 2:06:30 AM

The pain was multi-trillion, but the original fraud that caused the collapse wasn't.

by vkou

4/20/2026 at 1:41:44 AM

Fall guys.

Highest Profile Individuals Convicted Kareem Serageldin (Credit Suisse): Widely recognized as the only high-level Wall Street executive to serve prison time directly related to the GFC.

by lupire

4/20/2026 at 2:00:26 AM

No that's still about a decade out of date. TARP jailed IIRC 30 bank CEOs, it's just the cases took until 2017 or so and the meme had already implanted itself in people's brains. DoJ got so tired of people saying this that they put a database of all their convictions up but unfortunately it got DOGEd last year.

Many of the TARP convictions (the ones that involved the SEC) can still be found here, though:

https://www.sec.gov/enforcement-litigation/litigation-releas...

by bandrami

4/20/2026 at 2:44:38 AM

Very cool website. Looking through a few of those examples, holy Jesus there is a lot of fraud out there.

Fun read.

by Esophagus4

4/20/2026 at 6:39:31 AM

I'm sad DOGE killed the TARP litigation database because there was some wild stuff on it

by bandrami

4/20/2026 at 2:54:01 AM

What about the fraud that led up to the GFC -- pre-TARP? I think that's what people meme about.

by dpkirchner

4/20/2026 at 6:38:50 AM

The TARP investigations jailed people for that; that was it's main purpose. Taking the funding window required an audit, and people either lied on the audit (and got busted for that) or admitted to illegal lending or valuation on it (and got busted for that)

by bandrami

4/20/2026 at 12:51:36 AM

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

by yalogin

4/20/2026 at 1:37:15 AM

The unscrupulous in the white house will take your money (for a pardon) no matter what the crime.

by onemoresoop

4/20/2026 at 2:25:13 AM

No, no, no... money doesn't change hands directly. It's investment in the regime's crypto coin in the proper amount.

by burnt-resistor

4/20/2026 at 12:23:38 AM

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...

by nickpinkston

4/20/2026 at 12:47:56 AM

A lot of these people do go to prison but know one pays attention long enough to notice.

This same scam was common during the dotcom boom in the 1990s. A lot of people went to prison but every generation needs to learn this lesson the hard way apparently.

by jandrewrogers

4/20/2026 at 1:31:17 AM

They couldn't buy pardons in the 90's like they can in 2026. Nobody is going to prison.

by markdown

4/20/2026 at 2:12:45 AM

great to insert partisan talking points here. the last admin has no culpability so this is a great argument. thanks.

by wrqvrwvq

4/20/2026 at 12:25:07 AM

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.

by bandrami

4/20/2026 at 3:58:45 AM

When Armstrong's Tour de France doping was finally caught, the top 22 placed racers were all doping. It was the 23rd placed racer that was reportedly clean, and got the eventual first place.

by N_Lens

4/20/2026 at 12:34:38 AM

amd that’s probably good

by sharts

4/20/2026 at 3:17:19 AM

Pardon coming soon in 2027

by b3ing

4/20/2026 at 12:10:03 AM

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

by mandeepj

4/20/2026 at 12:20:40 AM

No, that seems unlikely. They committed the cardinal sin of stealing from the rich.

by da_chicken

4/20/2026 at 12:56:49 AM

Also probably why SBF is yet to be pardoned

by dylan604

4/20/2026 at 1:12:27 AM

He was a big supporter of the Democratic Party which would not necessarily lead to a pardon with the Republican administration.

by wj

4/20/2026 at 1:49:05 AM

Eric Adams is a Democratic politician, whom Trump's DOJ dropped charges for political favors from Adams. For the right bargain they don't even care about the party.

by zzrrt

4/20/2026 at 1:48:21 AM

He supported both parties.

by stingraycharles

4/20/2026 at 2:08:00 AM

Trevor Milton received an unconditional pardon for his Nikola fraud last year.

Trump has no problem selling pardons to people who stole from the rich. It's a big club, and he's open for business.

by vkou

4/20/2026 at 12:28:00 AM

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.

by PedroBatista

4/20/2026 at 1:47:49 AM

CEOs can say basically anything when it's talking about the future. They just have to include a safe harbor disclaimer about forward-looking statements.

by ralph84

4/20/2026 at 11:17:55 AM

[dead]

by immanuelis

4/20/2026 at 12:57:14 AM

[flagged]

by moomoo11

4/20/2026 at 1:43:03 AM

Because you fixate on the narrative you want to see and ignore the scamming being done by groups you're sympathetic to.

by add-sub-mul-div

4/20/2026 at 1:33:48 AM

> Why’s it almost always south asians

It isn't. It's very rarely south asians.

by markdown

4/20/2026 at 1:40:45 AM

I think most of the stories I’ve read, lately, are about good old-fashioned WASPs. Some, from fairly wealthy backgrounds.

But it will generally be reflective of the main demographic; as that affects the sample size.

I’ve learned that anyone can become a grifter, but the best ones are attractive and articulate.

by ChrisMarshallNY

4/19/2026 at 11:32:30 PM

[flagged]

by valianteffort

4/20/2026 at 12:04:36 AM

How many big fraud cases happened in the US over the last decade? I can think of many of them. Would u say that it’s a cultural thing in the US because of that? So ur statement is more about prejudice than anything.

by miltava

4/20/2026 at 12:04:35 AM

Someone call the Olympics because this is the largest jump I've ever seen.

by hennell

4/20/2026 at 12:02:49 AM

there's x evil people per million in every country, india just happens to have a lot of people. china tends to keep things within their borders.

by himata4113

4/19/2026 at 11:58:01 PM

I suppose it's a cultural thing for Americans then too, given the current White House occupant? I don't know, maybe every culture just has their share of shitty people.

by gnz11

4/20/2026 at 12:07:04 AM

> given the current White House occupant

Just listen to him speak from a podium in a red state while claiming start of a golden age, revenue of $18 trillion from tariffs, and we won in Iran, at least 50% of the crowd starts clapping. Makes me feel either I'm living in an alternate world or they are.

by mandeepj

4/20/2026 at 1:22:21 AM

I don't know how much it has to do with the administration and the top-level comment here was flagged so I'm lacking context but American exceptionalism is instilled here from birth so it does not surprise me in the slightest that founders grow up with the idea that they are built different and destined to change the world. Acting out the fantasy via fraud takes a special kind of person. It's not clear to me whether the dishonesty is uniquely American but I somewhat doubt it. The color of the delusion is, however.

by ellenhp

4/20/2026 at 2:56:47 AM

iLearningEngines? I guess we're all familiar with them and have thoughts and concerns about them. We don't. We're not.

by hank808