Enmeshed in Alleged Money Laundering and Loan Fraud, Founders of AI Startup Face Legal Scrutiny
The cofounders of AI-focused startup Builder.ai, backed by tech giants like Microsoft and SoftBank’s DeepCore AI-focused fund, find themselves in troubled waters as they face legal battles in connection with two separate criminal cases.
According to reports from the Financial Times, Sachin Dev Duggal, the chief executive and a co-founder, has been implicated in an alleged money laundering case, while another co-founder, Saurabh Dhoot, is entangled in an alleged loan fraud case.
The controversies surrounding Duggal stem from the Enforcement Directorate’s (ED) money laundering investigation into the now-defunct electronics giant Videocon. The investigation dates back to 2022 when Duggal was summoned as a witness regarding alleged “unexplained transactions” between his company (not Builder.ai) and Videocon.
Court documents accessed by FT reveal that the ED has been scrutinizing transactions between 2008 and 2012, suggesting funds transferred from Videocon to a company founded by Duggal in India, which were then allegedly redirected to Videocon’s overseas entities.
Despite initial summonses, Duggal failed to appear before the ED, prompting the agency to seek a non-bailable warrant against him. While the initial request was denied, subsequent efforts led to the warrant being approved by the Delhi High Court after Duggal was designated as a “suspect” rather than a witness.
In response, Duggal has denied any wrongdoing and challenged the validity of the warrant, emphasizing his cooperation with the ED’s investigation.
Meanwhile, Dhoot, another co-founder of Builder.ai, faces allegations related to loan fraud. Both Duggal and Dhoot were instrumental in establishing Builder.ai, which aims to simplify the process of app and website development using artificial intelligence.
The startup, founded in 2016 as Engineer.ai, gained traction with significant investments from leading tech investors. Despite the legal challenges faced by its founders, Builder.ai secured substantial funding rounds, reflecting investor confidence in its business model.
However, the legal woes of Duggal and Dhoot raise questions about the leadership of Builder.ai, particularly regarding transparency and compliance.
While Duggal’s lawyers assert his innocence and challenge the allegations against him, the ongoing investigations could cast a shadow over Builder.ai’s operations and its standing in the tech industry.
