iLearningEngines Execs Charged: 90% of Revenue Was Fake

Former iLearningEngines CEO and CFO are now facing fraud charges. The Department of Justice says they fabricated at least 90% of the company's $421 million in reported 2023 revenue. Almost the entire business was fake.

iLearningEngines would send money to supposed customers, who would then send it right back. Classic round-trip fraud. They backed it up with forged contracts for customers that didn't really exist. The company went public via SPAC in April 2024 through Skycross Acquisition Corp, hitting a $1.5 billion market cap on Nasdaq. All built on air.

Hindenburg Research exposed it. They published a report titled "ILearningEngines: An AI SPAC with Artificial Partners and Artificial Revenue" and the whole thing collapsed. Hindenburg also caught Super Micro's chip-selling scam. Two AI companies, two frauds, same short-seller.

The SPAC route deserves scrutiny here. Going public through a traditional IPO means underwriters, road shows, and institutional investors picking through your books. SPACs skip a lot of that. iLearningEngines got its $1.5 billion valuation with less due diligence than a Series B might require. When everyone is desperate to find the next AI winner, the guardrails get lower.