Investors have been fleeced out of more than $500 million by scammers who claim to be selling shares in Silicon Valley’s hottest companies.
The AI gold rush has attracted plenty of grifters, who have used fake sales reports, doctored bank statements or inflated share prices to dupe investors chasing the next tech jackpot, according to federal prosecutors.
The feds have brought fraud cases against pre-IPO investment platform Linqto, AI startup SKAEL and chatbot company GameOn. Former executives at the first two companies have pleaded guilty; the founder of GameOn remains under indictment, awaiting trial.
“This is the worst we’ve seen in the 40 years I’ve been auditing and observing the industry—companies just saying whatever they want, in particular in pre-IPO situations,” Francine McKenna, a CPA and former PricewaterhouseCoopers internal auditor who teaches accounting at Montclair State University, told The Post.
The cases offer a warning as Anthropic prepares for a blockbuster IPO later this year and OpenAI also pursues a listing — which would put the AI boom within reach of ordinary investors.
San Jose-based Linqto made more than $450 million from over 13,000 customers by promising access to coveted private companies such as Kraken and Ripple before they went public, but collapsed into bankruptcy in July 2025, according to the federal case against them.
Founder William Sarris allegedly imposed markups with a median of 60% — although some exceeded 200% — while telling customers they were paying “market” prices, prosecutors claimed.
Days before Linqto introduced a pricing tool in 2023, Sarris joked it would be “a little Wizard of Oz… don’t pay attention to that man behind the screen,” then added, “fake it till you make it, baby,” according to the indictment against him.
The company also allegedly manufactured scarcity, telling customers offerings were “sold out” when shares actually remained available, feds claimed.
After a compliance memo, then-executive Joseph Endoso messaged Sarris: “I was starting to try on orange jerseys for size last night” — a reference to prison clothing, according to the indictment.
Endoso, 66, who succeeded Sarris as CEO, pleaded guilty to fraud charges Aug. 27 and is cooperating with prosecutors. Sarris, 75, was arrested Sept. 2. His lawyer, Tim Treanor, insisted he “is innocent of these charges and intends to fight them.”
San Francisco startup SKAEL raised more than $40 million from investors while selling software it called “digital employees.” Founder Baba Nadimpalli admitted inventing revenue from companies that never subscribed to their services and customers who had canceled, federal prosecutors charged.
He also supplied bank records showing customer payments which never arrived. Nadimpalli pleaded guilty to securities and wire fraud in June 2025 and was sentenced that November to a year and a day in prison.
In a separate SEC case against him, an Oct. 5 order kept proceedings on hold while the agency considered a proposed settlement. The next filing is due Dec. 18.
GameOn’s founder, Alexander Beckman, raised more than $60 million between 2018 and 2024, prosecutors say.
He and his wife, attorney Valerie Lau, allegedly spent more than $4 million in investor funds on San Francisco real estate, private schools and a lavish wedding, pre the indictments against them, which also alleged Beckman forged audit reports bearing accounting firms’ names and trademarks.
In June 2024, Lau allegedly delivered a fake statement showing more than $13 million to a San Francisco bank branch for Beckman to collect. The account actually held $26, prosecutors say.
The couple were charged in a 25-count indictment in January 2025. Their case remains pending, with a jury trial scheduled for Sept. 13, 2027.
“Make it till you get caught. Ask for forgiveness, not permission. These are not new ideas,” McKenna explained of the tech rogues’ mindset.
What has changed, she notes, is people’s tolerance: “There is more of that behavior, and such behavior is more readily accepted as just part of doing business.”
The stakes are very high, but have been revised as the AI giants head toward Wall Street.
Anthropic is preparing for a November IPO, but some investors are discussing a valuation closer to $1.5 trillion — down from roughly $2 trillion previously expected, Reuters reported.
OpenAI recently told investors its annualized revenue was approaching $50 billion at the end of September, about $20 billion below an earlier reported figure, the Financial Times reported.
These kind of huge figures can be quoted by scammers, but they are merely forecasts.
McKenna urged prospective investors to be wary of any non-public company for which they can’t access their audited accounts.
“If they’re that close to an IPO, they definitely have audited financial statements… The problem is that nobody is asking for them and they’re not showing them,” she said.
For example, while it is worth a lot on paper, a prospectus reviewed by Reuters showed Anthropic generated just $4.6 billion in revenue in 2025 and posted an operating loss of more than $8 billion.
Both Anthropic and OpenAI have warned buyers about unauthorized stock deals. OpenAI says transfers of its stock which violate its restrictions will not be recognized and can “carry no economic value to you.” Anthropic has said stock sales without it’s board’s approval are void.
Neither company responded to requests for comment from The Post.
The SEC filed 456 actions in fiscal 2025, down from 583 a year earlier. It initiated just five against public companies and their subsidiaries in the first half of fiscal 2026 — the fewest for that period in at least 16 years, according to Cornerstone Research.
SEC Chairman Paul Atkins has defended an emphasis on the quality of cases over their quantity.
For Linqto customers, the promise of tech’s next windfall has turned into a fight to extract any kind of value from its bankruptcy.
Customers believed they were buying shares of top flight cutting edge companies like SpaceX, lawyer John Deaton said in a class action, “but that’s not what they were buying.”
“There’s an enormous hunger to get in on the next big thing,” McKenna said. “People want to hit the jackpot.”