San Francisco, California – The former CEO of a San Francisco artificial intelligence startup has pleaded guilty to orchestrating a scheme that defrauded investors of tens of millions of dollars. Baba Nadimpalli, 42, founder of SKAEL, Inc., admitted in federal court to one count of securities fraud and one count of wire fraud, acknowledging he provided false information about the company’s financial health and customer base. The plea closes a chapter on a high-flying Silicon Valley story built on promises of AI-powered “Digital Employees” but sustained by deception.
Founded in 2016, SKAEL marketed itself as a cutting-edge software-as-a-service platform, offering businesses automation tools to replace repetitive tasks with AI-driven solutions. The company charged corporate clients both implementation fees and recurring subscription fees for these so-called Digital Employees. The appeal of automation, and the rush to invest in AI, made SKAEL an attractive opportunity, drawing more than $40 million across three fundraising rounds between 2020 and 2022.
Behind the pitch, prosecutors say, was a series of carefully constructed lies. Nadimpalli inflated SKAEL’s annual recurring revenue, a critical measure that investors use to gauge the financial durability of a subscription-based company. In presentations, spreadsheets, and even financial statements, he exaggerated customer commitments, inventing contracts with companies that were never clients and overstating revenue from those who were. Investors looking at a healthy stream of predictable income instead saw an illusion…