Builder.ai’s Former Finance Chief Subpoenaed in US Investigation
Andres Elizondo, the former finance chief of collapsed artificial intelligence startup Builder.ai, has been subpoenaed to appear before a federal grand jury in Manhattan, according to reports from the Financial Times. Sources indicate the subpoena was issued last month as part of an investigation into the company’s financial practices.
According to the report, Elizondo oversaw finances for the London-based startup company from 2021 through 2023. The Financial Times reported that Elizondo was stopped by the FBI during a flight layover in Dallas in August, though sources familiar with the matter stated he was not considered a suspect and cooperated willingly with authorities.
Company’s Financial Troubles and Revenue Revisions
Builder.ai, which promised to help companies build applications and websites using artificial intelligence technology, was once valued at over $1 billion before collapsing into insolvency in May. The company’s downfall came after an internal review uncovered evidence of potentially bogus sales, forcing the company to revise its revenues downward to just 25% of previous estimates.
The Financial Times report noted that Builder.ai had announced in March it was hiring two Big Four auditing firms to examine its finances from 2022 and 2023. The company’s current CEO, Manpreet Ratia, who took leadership in February, told Bloomberg the company is working to ensure it has its “house in order” and suggested the sales reporting discrepancies might stem from customer discounts.
Historical Legal Challenges and Previous Allegations
Builder.ai’s troubles predate the current investigation, according to a late August report by The New York Times. The company, previously operating under the name Engineer.ai, faced a lawsuit in 2019 from former executive Robert Holdheim, who alleged he was fired for raising concerns about problems within the startup.
That lawsuit accused the company of being “smoke and mirrors” and maintaining two sets of books—one with inflated numbers for investors and another containing the actual figures. The company denied these allegations, rebranded in October 2019, and eventually settled with Holdheim out of court. The current grand jury investigation represents the latest in a series of legal challenges for the troubled AI company.
Industry Context and Broader Implications
While Builder.ai faces scrutiny, investment continues to flow into the AI sector, particularly for companies developing products that integrate intelligence with business workflows. This trend reflects ongoing market trends favoring practical AI applications over theoretical capabilities.
Current CEO Ratia has positioned the company’s troubles as a cautionary tale, stating in previous reports that “Builder should be a warning sign for investors, for employees, for executives. Be careful of what you claim you are. At some point, it catches up with you.” This sentiment comes amid broader industry developments and related innovations transforming the technology landscape.
Legal Process and Next Steps
The subpoena issued to Elizondo represents a significant development in the ongoing investigation into Builder.ai’s financial practices. Grand jury proceedings are typically confidential, making the public disclosure of this subpoena unusual and suggesting potentially serious legal implications for the company and its former executives.
As the investigation continues, industry observers are watching how this case might affect regulatory scrutiny of AI startups and their financial reporting practices. The situation unfolds against a backdrop of recent technology sector challenges and market trends that have seen increased investor caution toward highly-valued technology startups.
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