> 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...

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darth_avocado an hour ago | parent | next [-]

> 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.

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wrqvrwvq an hour ago | parent [-]

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.

	▲	arikrahman 31 minutes ago \| parent [-]
		They should've asked their iLearningEngine AI to learn how to sophisticate their process.

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cloudbonsai 12 minutes ago | parent | prev | next [-]

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.

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HWR_14 2 hours ago | parent | prev | next [-]

> "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 2 hours ago \| parent [-]
		I think the issue here isn't that they did seller financing but rather there was not an actual buyer at all.

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walrus01 3 hours ago | parent | prev | next [-]

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

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ethanwillis 3 hours ago | parent [-]

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

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onemoresoop an hour ago | parent | next [-]

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

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Esophagus4 14 minutes ago | parent | next [-]

And before that, dot-com: https://www.forbes.com/2001/01/09/0109zapata.html

Some things will never change

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jordanb an hour ago | parent | prev [-]

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

	▲	saghm 39 minutes ago \| parent [-]
		"Cloud" for a bit too

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vrganj 2 hours ago | parent | prev [-]

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

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ares623 2 hours ago | parent [-]

A sucker is born everyday

	▲	MarkusQ 2 hours ago \| parent [-]
		One a day? I think we're up to over 4 a second. https://worldstats.io/clock

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2 hours ago | parent | prev [-]

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