Recent Indictment Signals DOJ’s AI Criminal Enforcement Priorities

Earlier this month, the DOJ announced the indictment of two former executives of iLearning Engines, a  artificial intelligence (AI)-driven business automation solutions, for an alleged scheme to defraud investors. This Debevoise blog says that the indictment sends a signal about the DOJ’s AI prosecution priorities:

While DOJ’s public statements about the indictment squarely positioned the misconduct as an AI-enabled fraud, the underlying charged conduct did not itself concern AI, but instead involved more conventional methods of accounting and securities fraud such as sham round-trip transactions and falsified disclosures about revenue, customers, contracts, and operations. The case underscores that prosecuting AI-related fraud—even where the fraudulent misstatements and omissions themselves do not squarely relate to AI—remains a priority under the current DOJ.

For that reason, we expect that companies will face even greater scrutiny by prosecutors and regulators for AI washing—misstatements and omissions relating to AI-related capabilities, tool adoption, and business impact. AI washing risk can arise in any context in which a company makes statements about AI, including to counterparties such as lenders, service providers such as auditors, and investors. As we have discussed here, the rapid advancement of agentic AI exposes companies to the additional vector of agentic AI washing risk.

The blog stresses the importance of defining terms like “AI” and “agentic AI” precisely and sharing those across all relevant areas of the company. It also says that companies must ensure any representations they make about AI and agentic AI are accurate and substantiated, and that any material limitations or uncertainties are appropriately disclosed.