US Authorities Intensify Builder.ai Investigation
Former Builder.ai chief financial officer Andres Elizondo has been subpoenaed by US prosecutors, according to reports from the Financial Times, as authorities deepen their investigation into the collapse of the Microsoft-backed startup. The subpoena reportedly requests Elizondo’s appearance before a grand jury in a Manhattan court for questioning this September.
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Subpoena Details and FBI Involvement
The subpoena was signed by Jay Clayton, the US attorney for the Southern District of New York, and was served to Elizondo in August during a flight stopover in Dallas, sources indicate. According to people familiar with the matter, FBI agents handed Elizondo the document, though the report states he is not considered a suspect or target and has been cooperating willingly with authorities.
Elizondo oversaw the London-based company’s global finances from 2021 to 2023, during a period of significant growth and subsequent collapse. His LinkedIn profile shows he served as group CFO until May 2023, though Builder.ai’s lawyers previously told the FT he left in late July that year.
Startup’s Meteoric Rise and Sudden Collapse
Builder.ai, co-founded by former CEO Sachin Dev Duggal, who styled himself as “chief wizard,” grew to become one of the UK’s largest technology startups by promising to revolutionize app and website development using artificial intelligence. The company’s ambitious vision attracted significant backing, including from Microsoft, and propelled its valuation to over $1 billion.
However, the company collapsed into insolvency in May after an internal investigation uncovered evidence of potentially bogus sales, according to reports. The investigation reportedly led Builder.ai to revise its revenues down to just a quarter of prior estimates, raising serious questions about the company’s financial reporting practices amid broader industry developments.
Revenue Inflation Allegations Surface
In June, the Financial Times revealed that Builder.ai was suspected of using multiple methods to inflate revenues, including improperly booked discounts, minimal upfront deposits, and seemingly circular transactions with key customers. These findings emerged as part of ongoing market trends analysis.
Duggal’s lawyers have disputed the accuracy of these allegations, while previous legal representatives for both Duggal and Builder.ai maintained that neither the executive nor the company had misreported sales figures. The situation highlights the challenges facing recent technology startups navigating rapid growth periods.
Broad Document Requests and Ongoing Investigation
The subpoena served to Elizondo reportedly requests communications from January 2018 to present with numerous people connected to the business, including current, former, and potential creditors. The notice also seeks financial records and documents regarding “the accuracy or completeness of Builder.ai/Engineer.ai’s financial disclosures to external recipients” and the company’s “reporting of bookings, sales or revenue.”
Sources indicate that FBI agents were downloading emails and documents from Builder.ai’s Google cloud system as recently as last week, suggesting the investigation remains active. The scope of document requests reflects concerns about corporate governance practices within the company.
Leadership Vacuum and Company Status
Builder.ai was still searching for a permanent CFO replacement when the company collapsed earlier this year, creating a leadership vacuum during a critical period. The company’s inability to fill this key position reportedly complicated both internal oversight and external investigations into its financial practices.
The investigation led by Jay Clayton and the Southern District of New York represents one of the highest-profile examinations of a UK technology startup’s collapse, occurring alongside other related innovations in regulatory scrutiny. Builder.ai has declined to comment on the ongoing investigation, while the US Southern District of New York and FBI have not responded to requests for comment, mirroring patterns seen in other technology sector investigations.
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