Oh no, not this again<\/a>!<\/p>\n This story is making the rounds today and it\u2019s highly relevant to the audience not just because AI is being shoved down everyone\u2019s throats including accountants\u2019. You\u2019ll see why in a minute. First, the quick story of what\u2019s happening with Builder.ai:<\/p>\n \ud83d\ude03 The Natasha neural network turned out to be 700 Indian programmers<\/p>\n The startup BuilderAI offered to write any application, like in a constructor, by selecting the necessary functions.<\/p>\n In reality, customer requests were sent to the Indian office, where 700 Indians wrote code\u2026 pic.twitter.com\/lYWipf63cp<\/a><\/p>\n \u2014 Bernhard Engelbrecht (@BernhardEngel_) May 29, 2025<\/a><\/p><\/blockquote>\n Text:<\/p>\n \ud83d\ude03 The Natasha neural network turned out to be 700 Indian programmers<\/p>\n The startup BuilderAI offered to write any application, like in a constructor, by selecting the necessary functions.<\/p>\n In reality, customer requests were sent to the Indian office, where 700 Indians wrote code instead of AI.<\/p>\n With the help of this scam, the startup attracted $445 million in investments from major IT giants, including Microsoft, over eight years.<\/p>\n At the same time, the applications \u201cwritten by AI\u201d constantly glitched, the code was unreadable, the functions did not work \u2014 in general, everything was like real artificial intelligence.<\/p>\n After the deception was exposed, the startup officially went bankrupt \ud83e\udd37\u200d\u2642\ufe0f<\/p>\n<\/blockquote>\n Builder.ai\u2019s pitch on their website states that \u201cAI assembles your app features like a LEGO set.\u201d <\/p>\n More on how \u201cNatasha\u201d works here<\/a>.<\/p>\n Now the relevant part. A couple days ago, Bloomberg<\/em> published a piece with a pretty incendiary headline: Builder.ai Faked Business With Indian Firm VerSe to Inflate Sales, Sources Say<\/a><\/p>\n Builder.ai, the artificial intelligence startup that recently announced plans to declare bankruptcy, faked business with the Indian social-media startup VerSe Innovation for years to falsely inflate its sales, according to documents reviewed by Bloomberg and people with direct knowledge of the practice.<\/p>\n The two companies routinely billed one another for roughly the same amounts between 2021 and 2024, documents reviewed by Bloomberg show, as part of an alleged practice known as \u201cround-tripping\u201d that the people said Builder.ai used to inflate revenue figures it presented to investors. In many cases, products and services weren\u2019t actually provided to either company for these payments, said the people, who asked not to be identified discussing confidential information.<\/p>\n<\/blockquote>\n VerSe Innovation co-founder Umang Bedi said the allegations of inflating revenues are \u201cabsolutely baseless and false.\u201d Defamatory even. \u201cWe\u2019re not the kind of company that is in the business of inflating revenues,\u201d he said.<\/p>\n Amid accusations of financial statement malfeasance, VerSe brought Deloitte in for an audit in 2024. Deloitte flagged a lack of appropriate internal controls over the evaluation and selection of suppliers, approval of purchase orders and invoices, and payments<\/a>. Despite the risk of material misstatement, Deloitte said the company\u2019s consolidated financial statements presented as true and fair.<\/p>\n The US Attorney\u2019s Office for the Southern District of New York had already been sniffing around before Builder.ai went bust, requesting financial statements and details on accounting policies according to earlier Bloomberg<\/em> reporting<\/a>.<\/p>\n Wall Street Journal wrote about the company way back in 2019, when it went by Engineer.ai. In \u201cAI Startup Boom Raises Questions of Exaggerated Tech Savvy<\/a>\u201d WSJ wrote:<\/p>\n Startup Engineer.ai says it uses artificial-intelligence technology to largely automate the development of mobile apps, but several current and former employees say the company exaggerates its AI capabilities to attract customers and investors.<\/p>\n Documents reviewed by The Wall Street Journal and several people familiar with the company\u2019s operations, including current and former staff, suggest Engineer.ai doesn\u2019t use AI to assemble code for apps as it claims. They indicated that the company relies on human engineers in India and elsewhere to do most of that work, and that its AI claims are inflated even in light of the fake-it-\u2019til-you-make-it mentality common among tech startups.<\/p>\n<\/blockquote>\n Those rumors didn\u2019t deter Microsoft from investing in the company in 2023. Microsoft Corporate Vice President, Business Development Jon Tinter said at the time their collaboration with Builder.ai \u201cis an extension of our mission to empower every person and every organization on the planet to achieve more.\u201d<\/p>\n \u201cWe see Builder.ai creating an entirely new category that empowers everyone to be a developer and our new, deeper collaboration fuelled by Azure AI will bring the combined power of both companies to businesses around the world,\u201d he was quoted as saying in a press release<\/a>.<\/p>\n Something else to note: A design studio in Poland pointed out on LinkedIn<\/a> that Builder.ai\u2019s logo looks awfully familiar.<\/p>\n\n
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