Ben Eshay, the former CEO of Israeli startup PromaI, admitted to drafting agreements without any actual correspondence or interest from companies like Boeing, Tesla, and Medtronic.

The company has filed a lawsuit against him in the Tel Aviv District Court, accusing him of fabricating contracts to mislead investors.

PromaI claims it invested nearly 20 million shekels (US$5.44 million) into products that were never ordered based on these false agreements.

Eshay, 62, also misrepresented his professional background, falsely claiming to be a retired brigadier general and test pilot.

Investigators presented evidence, including a forged document with Boeing’s logo and CEO’s signature, which Eshay reportedly created using ChatGPT.  He denies the allegations, with his lawyers calling them “entirely baseless.”

The lawsuit seeks 10 million shekels (US$2.72 million) in damages, and the case is ongoing.

🔗 Source: Calcalist

🧠 Food for thought

1️⃣ Israel’s paradoxical position as both fraud hotspot and anti-fraud innovation hub

The PromaI case reflects a unique duality in Israel’s tech landscape that has persisted for years.

Israel has been identified as a significant hub for financial scams, with the binary options industry alone reportedly defrauding investors of hundreds of millions of dollars globally, according to investigations published in 2016 1.

International lawyer Gabriele Giambrone represented 2,500 clients allegedly defrauded by Israeli-based binary options and forex companies, highlighting the scale of the problem 2.

Yet simultaneously, Israel has emerged as a global leader in fraud prevention technologies, with companies like Riskified achieving unicorn status after raising $165 million specifically to help online retailers combat fraud 3.

This dichotomy creates a dynamic where Israeli startups develop increasingly sophisticated fraud prevention tools while scammers evolve their tactics, as exemplified by the alleged use of ChatGPT for document forgery in this case.

2️⃣ The “fake it till you make it” culture crossing into criminal territory

The PromaI incident reveals how startup culture can create dangerous incentives when founders face pressure to show growth and traction.