February 17, 2026, 7:48 AM EST

By Wade T. Paton

The artificial intelligence boom has its first major local casualty.

Acting New Jersey Attorney General Jennifer Davenport announced the indictment of Xiao Hu for allegedly running a million-dollar Ponzi scheme through his Mercer County tech company.

Hu is 55 and formerly lived in Princeton before relocating to Orlando. A state grand jury hit him with charges of securities fraud, theft by deception, money laundering and misconduct by a corporate official.

The Phantom Trading Bot

His pitch was perfectly timed. Hu told victims to invest in Skyline Technologies USA LLC and let its cutting-edge AI trading software guarantee massive annual returns. State investigators say the bots never existed.

Between August 2019 and November 2023 Hu allegedly swindled six people out of more than $1 million. Five investors handed over $400,000 after being promised 10% annual yields from the fake AI software. A sixth victim identified in court documents as "H.M." dropped $600,000 directly into the business.

Instead of writing code Hu was allegedly writing checks to himself.

Shielding the Stolen Capital

Prosecutors claim he laundered the cash to pay off earlier investors to keep the grift alive while siphoning the rest for himself.

The New Jersey Office of the Attorney General traced the missing money to a new house, an existing mortgage, luxury cars, private school tuition and personal credit card bills.

While the state knows Hu bought a new house in Orlando his name currently avoids standard public property searches. White-collar criminals frequently exploit legal loopholes by hiding their mansions behind anonymous shell companies. This bourgeois tactic protects their stolen wealth from immediate seizure while the legal process drags out.

"The defendant allegedly used the allure of AI technology to defraud investors of more than $1 million," Davenport stated. "We will continue to prosecute those who use their corporate positions to cheat others."

OSFFCP Legal Chief Pablo Quiñones noted that Hu weaponized the public's fascination with artificial intelligence to steal and launder money for his own benefit. The Division of Criminal Justice is actively handling the prosecution alongside state police. Second-degree crimes in New Jersey carry up to 10 years in state prison and a $150,000 fine.

Officials have not yet announced a timeline for Hu's extradition from Florida to face the charges.