Scammers have swindled investors out of over $500 million by falsely claiming to sell shares in some of Silicon Valley’s leading companies.
The surge in interest in AI has drawn numerous fraudsters, who have manipulated sales reports, altered bank statements, or exaggerated stock prices to mislead investors seeking the next tech breakthrough, as stated by federal prosecutors.
Fraud cases have been filed against the investment platform Linqto, AI company SKAEL, and chatbot firm GameOn. The former executives of Linqto and SKAEL have admitted guilt, while GameOn’s founder is still facing charges and awaiting trial.
Francine McKenna, a CPA and accounting instructor at Montclair State University, voiced her concerns about the industry, noting, “This is the worst we’ve seen in 40 years… companies just saying whatever they want, especially in pre-IPO situations.”
These cases serve as a cautionary tale as Anthropic gears up for a significant IPO later this year, and OpenAI also aims for a listing, potentially opening the AI sector to everyday investors.
Linqto, based in San Jose, reportedly garnered over $450 million from 13,000 customers, luring them with promises of access to much-desired private firms like Kraken and Ripple before they went public. The company filed for bankruptcy in July 2025.
The founder, William Sarris, allegedly charged markups averaging 60%—with some even exceeding 200%—all while misleading customers into believing they were paying “market” rates.
Days before launching a new pricing tool in 2023, Sarris humorously commented on it being like “a little Wizard of Oz… don’t pay attention to that man behind the screen,” and added, “fake it till you make it, baby,” according to the charges against him.
Additionally, Linqto was accused of creating artificial scarcity, deceiving clients into thinking that offerings were “sold out” when shares were still available.
In one instance, Endoso, the company’s former executive, sent Sarris a message referencing prison time: “I was starting to try on orange jerseys for size last night,” highlighting the severity of the situation.
Endoso, who took over as CEO from Sarris, pled guilty to fraud charges on August 27 and is currently cooperating with federal authorities. Sarris, arrested on September 2, maintains his innocence through his lawyer.
In a related case, San Francisco startup SKAEL is accused of raising over $40 million while falsely promoting its software as “digital employees.” Nadimpalli, its founder, admitted to fabricating revenue figures from nonexistent clients and those who had canceled their subscriptions.
Furthermore, he provided false bank records claiming customer payments that never materialized. Nadimpalli pled guilty to fraud in June 2025 and received a sentence of just over a year in prison.
In another ongoing case, GameOn’s founder, Alexander Beckman, raised more than $60 million from 2018 to 2024 through alleged fraudulent means, including faked bank statements and forged audits. He and his wife purportedly misallocated over $4 million in investor funds towards real estate and personal expenses, including an extravagant wedding.
One specific incident involved Valerie Lau submitting a fake bank statement indicating more than $13 million when the account actually contained around $26. They were charged with multiple counts in January 2025, and the case is set for jury trial in September 2027.
McKenna pointed out that the mentality of these fraudsters often revolves around evading accountability: “Make it till you get caught. Ask for forgiveness, not permission.” She suggests that shifting attitudes towards such behavior have gotten progressively lenient. “Such behavior has become more acceptable as just a part of doing business,” she noted.
The stakes are undoubtedly heightened, especially with the impending IPOs of major AI companies on the horizon.
Anthropic is preparing to go public in November, but investor discussions indicate its valuation may drop to about $1.5 trillion, down from an earlier expectation of around $2 trillion. Meanwhile, OpenAI recently informed investors that its annualized revenue was nearing $50 billion, significantly below an earlier estimate by about $20 billion.
While these figures sound high, McKenna warns they are often mere forecasts, and prospective investors should exercise caution, especially with companies lacking transparent financial histories. “If they’re close to an IPO, they should have audited financial statements… but nobody seems to be asking for them,” she explained.
Both Anthropic and OpenAI have cautioned against unauthorized stock transactions. They assert that any sales without proper board approval are deemed invalid. There has been no response from either company regarding these issues.
The SEC reported a decrease in enforcement actions, with only 456 in 2025 compared to 583 in the previous year, including a minimal count against public companies.
For many Linqto investors, the initial promise of major tech gains has turned into a struggle to salvage value from the company’s bankruptcy. Clients believed they were investing in innovative companies like SpaceX, as attorney John Deaton remarked in a class action, but that was not the reality.
“There’s an overwhelming desire to get involved in the next big thing,” McKenna noted. “People want to hit the jackpot.”
