The former chief financial officer for Builder.ai has reportedly been subpoenaed by American prosecutors.
Andres Elizondo, ex-finance chief for the collapsed artificial intelligence (AI) startup, was called to appear before a grand jury in Manhattan last month, the Financial Times (FT) reported Sunday (Oct. 19), referring to a subpoena seen by the news outlet.
According to the report, Elizondo oversaw the London-based Builder’s finances from 2021 to 2023. He was stopped by the FBI in August on a flight stopover in Dallas, sources familiar with the matter told the FT. One source said he was not a suspect and cooperated willingly.
Builder.ai, which promised to help companies build apps and websites more easily with AI, was at one time valued at more than $1 billion. As the FT noted, the company slipped into insolvency in May after an internal review uncovered evidence of potentially bogus sales and it revised down revenues to just 25% of previous estimates.
The company had announced in March it was hiring two of the Big Four auditing firms to examine its finances from last year and 2023.
Manpreet Ratia, who became CEO of Builder.ai in February, told Bloomberg that the company is seeking to make sure it has its “house in order” and that the discrepancies in the sale reporting could be the result of discounts the company offered to customers.
“For me to come out and say, ‘This is inaccurate’ — I don’t think I’m at the stage to do that,” Ratia said. “When the audit report comes out, it will tell me everything.”
A report in late August by The New York Times noted that Builder.ai’s troubles predated the current AI revolution. The company, then called Engineer.ai, was sued in 2019 by Robert Holdheim, a former executive who alleged he had been fired for calling attention to problems at the startup.
That suit said the startup was just “smoke and mirrors,” accusing Builder.ai of keeping two sets of books, one with phony numbers for investors, one with the real numbers. The company denied the allegations, rebranded in October 2019, and settled with Holdheim.
“Builder should be a warning sign for investors, for employees, for executives,” Ratia said in that report. “Be careful of what you claim you are. At some point, it catches up with you.”
Meanwhile, money continues to flow into AI startups, particularly those making “products that connect intelligence with real business workflows,” as PYMNTS wrote last week.
“From developer infrastructure to compliance automation and communication tools, companies are building systems that make AI practical, scalable and enterprise-ready,” that report said.
Source: https://www.pymnts.com/