> 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...

• HWR_14

  today at 1:06 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?

  • dualityoftapirs

    today at 1:17 AM

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

• today at 12:44 AM

• walrus01

  yesterday at 11:47 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.

  • ethanwillis

    today at 12:19 AM

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

    • vrganj

      today at 12:24 AM

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

      • ares623

        today at 12:35 AM

        A sucker is born everyday

        • MarkusQ

          today at 1:23 AM

          One a day? I think we're up to over 4 a second.

          https://worldstats.io/clock

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

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...

• jandrewrogers

  today at 12:47 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.

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

• shoo

  today at 1:00 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.

• dmix

  today at 12:02 AM

  Federal investigations always take forever.

  • bandrami

    today at 12:23 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.

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.

• sharts

  today at 12:34 AM

  amd that’s probably good

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

• da_chicken

  today at 12:20 AM

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

  • dylan604

    today at 12:56 AM

    Also probably why SBF is yet to be pardoned

    • wj

      today at 1:12 AM

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

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.

[flagged]

• miltava

  today at 12:04 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.

• hennell

  today at 12:04 AM

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

• himata4113

  today at 12:02 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.

• gnz11

  yesterday at 11:58 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.

  • mandeepj

    today at 12:07 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.

  • ellenhp

    today at 1:22 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.

Why’s it almost always south asians scamming lately?

First it was hipsters, then weirdo geek freaks.