The founder of a San Francisco artificial intelligence startup made false claims about the company in order to scam millions out of investors, federal prosecutors allege.
Baba Nadimpalli, former CEO of SKAEL Inc., is charged with securities and wire fraud for allegedly defrauding investors and misleading them about the company’s revenue and other financial and sales information.
Nadimpalli, an Australian citizen, founded the “digital employee” company SKAEL in 2016, running it as CEO until July 2022, according to an indictment filed Jan. 17 that was unsealed Monday.
The 41-year-old claimed his firm would provide corporate clients with artificial intelligence and automation software to assist customers with mundane, time-intensive tasks.
The indictment says that from January 2020 to around February 2022, SKAEL raised more than $40 million in three rounds of financing. To induce prospective and existing investors to invest, Nadimpalli allegedly made false claims regarding SKAEL’s revenue, customer base, and other financial information.
In or around February 2022, SKAEL raised approximately $30 million in a Series A preferred stock offering that valued the company at approximately $230 million.
In connection with the stock offering, Nadimpalli allegedly created an electronic data room for potential investors that contained materially false information about the company.
Representatives for the company once told Venturebeat that Google was among its customers. Google did not immediately respond to a request for comment.
Nadimpalli is charged with three counts of securities fraud and seven counts of wire fraud. If convicted, he faces a maximum sentence of 20 years in prison and fines.
The announcement was made by U.S. Attorney Ismail J. Ramsey and Federal Bureau of Investigation Special Agent in Charge Robert K. Tripp. The case is being handled by the Corporate and Securities Fraud Section of the U.S. attorney’s office for the Northern District of California.