Israeli startup sues ex-CEO for fraud, and allegedly forging contracts using ChatGPT
Promai accuses Erez Ben-Eshay of fabricating fake contracts with giants like Boeing and Tesla, posing as a pilot and romancing the founder to defraud the company
Sharon Wrobel is a tech reporter for The Times of Israel
Israeli startup Promai, a developer of an artificial intelligence-based platform for error-free manufacturing, is suing its former chief executive officer Erez Ben-Eshay, for NIS 10 million ($2.7 million) in damages for alleged fraud and forgery.
In the lawsuit filed by the startup on Sunday to the Tel Aviv District Court, Promai alleges that Ben-Eshay, who “posed as a senior officer in the Israeli Air Force, forged, cheated lied, and defrauded the company.”
Promai accuses Ben-Eshay of using ChatGPT to fabricate documents, including signed product purchase agreements and contracts with prominent global firms, including planemaker Boeing, electric vehicle company Tesla and medical device firm Medtronic.
Based on the alleged fake documents and commercial contracts, Promai spent an estimated NIS 20 million on developing technologies and products for customers that did not exist. As a result, the startup suffered heavy financial damage.
Founded in 2022 by AI expert Dr. Dina Goren-Bar, Promai has developed an AI-based technology platform to streamline the transfer of essential information to production lines, reduce operational malfunctions, and improve the management and maintenance of manufacturing processes.
To date, the Tel Aviv-based startup, which employs about 40 people, has raised $7 million from private investors.
According to the lawsuit, Ben-Eshay was appointed CEO after misrepresenting himself and receiving 12% of the startup’s shares.
Promai claims that Ben-Eshay posed as a test pilot and a high-ranking reservist officer in the Israeli Air Force, to win the trust of the founder, Dr. Goren, with whom he formed a personal romantic relationship.
“It has now become clear that the defendant is married and is living with another woman, and that the stories he told Dr. Goren about being away at night for military or operational duties were fabricated,” according to the lawsuit.
Attorneys Ariel Shmul and Avital Kidron, who represent Ben-Eshay, said in response that their client “denies all the allegations against him,” adding that “the claims are baseless and completely fabricated.”
“Our client acted lawfully in his conduct as the company’s CEO,” Shmul and Kidron stated. “Due to the conduct of certain individuals in the company, our client suffered great personal and financial damage.”
“The use of his name in the affair is a mistake. It appears that this is a business dispute between other parties. Our client is not a party to the matter,” they added.
First suspicions of the alleged scam are understood to have surfaced as the startup sought to raise capital in a new funding round and investors demanded to speak with customers. As a result, Promai hired the services of business firm Wizman-Yaar to conduct an investigation.
Attorneys David Fohrer and Limor Levy, who represent Promai, said that “the company filed the lawsuit shortly after receiving the investigator’s report exposing the alleged fraud.”
“The company will pursue all available legal actions against the defendant in order to receive compensation for the damages,” the attorneys said in a statement.
The Times of Israel Community.