(Bloomberg) — US prosecutors demanded that Builder.ai hand over financial statements and other documents, signaling that the artificial intelligence company was facing legal scrutiny in the weeks before it went bust.
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Builder.ai’s General Counsel Adi Vinyarsh told employees to preserve documents after the US Attorney’s Office for the Southern District of New York requested information including accounting policies and a list of customers, according to an internal company email reviewed by Bloomberg and people familiar with the matter.
The request followed reports about the London-based company’s change of leadership and financial issues, according to the May 8 email from Vinyarsh and the people, who asked not to be identified because the request isn’t public. The internal email said the request was a subpoena from the US Attorney’s Office in Manhattan.
Bloomberg reported in March that multiple former Builder.ai employees had alleged that the company, which helps businesses quickly create custom smartphone apps, inflated sales figures on several occasions. The founder and chief executive officer of the AI firm, Sachin Dev Duggal, was ousted in February.
The US Attorney’s Office in Manhattan declined to comment. Builder.ai and Duggal didn’t immediately respond to messages seeking comment. Duggal wasn’t mentioned in Vinyarsh’s email.
Subpoenas from federal prosecutors are often requests to provide information as part of an investigation. The Manhattan US attorney is one of the most powerful US prosecutors.
Builder.ai, which was valued at about $1.5 billion in a 2023 fundraising round led by the Qatar Investment Authority, said last week it was appointing an administrator to oversee its insolvency and began to wind down operations. Microsoft Corp. also made an equity investment in 2023 as part of a strategic partnership.
Builder.ai’s collapse came after a group of creditors, led by Israeli firm Viola Credit, seized most of the company’s cash following revelations that it had overstated its revenue forecast by 300%, Bloomberg reported Thursday.
The company was an early success story for European tech. The World Bank Group’s International Finance Corp., Hollywood mogul Jeffrey Katzenberg’s WndrCo, Lakestar and SoftBank Group Corp.’s Deepcore incubator also invested in Builder.ai.