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Builder.ai’s Former CFO Subpoenaed in Federal Investigation
Former Builder.ai chief financial officer Andres Elizondo has been subpoenaed by US prosecutors as authorities investigate the circumstances surrounding the collapse of the Microsoft-backed startup, according to reports from the Financial Times. The subpoena reportedly requests Elizondo appear before a grand jury in a Manhattan court for questioning in September.
FBI Encounter and Investigation Scope
Sources indicate Elizondo was stopped by the FBI in August during a flight stopover in Dallas, where agents handed him a subpoena signed by Jay Clayton, the US attorney for the Southern District of New York. According to people familiar with the matter, Elizondo was not considered a suspect or target of any investigation and had willingly cooperated with authorities.
Builder.ai’s Rapid Rise and 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 based on its promise to revolutionize app and website development using artificial intelligence. The company had once been valued at over $1 billion before collapsing into insolvency in May.
Analysts suggest the company’s downfall followed an internal investigation that uncovered evidence of potentially bogus sales, forcing the company to revise down revenues to just a quarter of prior estimates. The investigation reportedly revealed concerns about the accuracy of financial reporting amid broader industry developments in financial oversight.
Revenue Inflation Allegations
According to the report, 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. The subpoena served to Elizondo reportedly requested communications from January 2018 to the present with various people connected to the business, including current, former, and potential creditors.
The notice also asked for 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.” These developments come amid wider related innovations in corporate governance standards.
Ongoing Federal Investigation
Before the company’s collapse, the US attorney’s office for the Southern District of New York had requested Builder.ai hand over documents relating to its financial reporting, accounting practices, and customer relationships. According to sources familiar with the matter, FBI agents were downloading emails and documents from Builder.ai’s Google cloud system as recently as last week.
The investigation highlights increasing scrutiny of recent technology startups and their financial practices, particularly those with high-profile backers and substantial valuations. Builder.ai’s legal representatives previously stated that neither Duggal nor the company had misreported sales figures, with Duggal’s current lawyers disputing the accuracy of the allegations.
Leadership Timeline Questions
According to his LinkedIn profile, Elizondo served as Builder.ai’s group CFO from February 2021 to May 2023, though lawyers for Builder.ai previously told the Financial Times he left in late July that year. The company was reportedly still searching for a formal replacement when it collapsed earlier this year, reflecting broader market trends in executive turnover.
Builder.ai declined to comment on the ongoing investigation. The US Southern District of New York and FBI did not respond to requests for comment, according to the report.
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