Founder of AI Start-Up SKAEL Pleads Guilty to Fraud

SAN FRANCISCO – Baba Nadimpalli, the founder and former Chief Executive Officer of SKAEL, Inc. (SKAEL), pleaded guilty in federal court yesterday to one count of securities fraud and one count of wire fraud. The charges are in connection with a scheme to defraud investors by providing false information about the company’s revenue, annual recurring revenue (ARR), and other financial and sales data.

Nadimpalli, 42, an Australian citizen who previously lived in San Francisco, founded SKAEL in 2016 and served as its CEO until July 2022. SKAEL, a San Francisco-based software-as-a-service company, provided corporate clients with AI and automation software to assist with mundane, time-intensive tasks through “Digital Employees.” The company earned revenue by charging implementation fees for the creation of Digital Employees and subscription fees for their use.

From January 2020 to February 2022, SKAEL raised over $40 million in three rounds of financing. To attract and retain investors, Nadimpalli provided false information about SKAEL’s customer and sales data, revenue, and ARR. ARR, which reflects the company’s monthly subscription revenue multiplied by 12, was a critical metric for investors considering investments in SKAEL.

In 2021, Nadimpalli misrepresented that SKAEL was receiving ARR from companies that did not subscribe to its software and services. He also overstated ARR from certain customers and falsely claimed that terminated subscriptions were still active. In February 2022, SKAEL raised approximately $30 million in a Series A preferred stock offering, valuing the company at about $230 million after closing.

To support this offering, Nadimpalli directed the creation of an electronic data room containing a spreadsheet with false information about ARR and customers, false financial statements, and an investor presentation with misleading data about ARR, revenue, and customer adoption. He further provided investors and a financial employee with false bank account information, including fabricated customer payments.

United States Attorney Craig H. Missakian and FBI Special Agent in Charge Sanjay Virmani announced the plea. Nadimpalli is scheduled to be sentenced by Senior U.S. District Judge Charles R. Breyer on September 17, 2025. He faces a maximum penalty of 20 years in prison and a $5 million fine for securities fraud and 20 years in prison and a $250,000 fine for wire fraud. The sentence will be imposed by the court after considering the U.S. Sentencing Guidelines and the federal statute governing sentencing, 18 U.S.C. § 3553.

Assistant U.S. Attorneys Noah Stern and Ilham Hosseini are prosecuting the case with the assistance of Mark DiCenzo and Lynette Dixon. The prosecution is the result of an investigation by the FBI. The U.S. Attorney’s Office and the FBI thank the San Francisco Regional Office of the Securities and Exchange Commission, which also filed a civil enforcement action against Nadimpalli in the Northern District of California.