Indian American executives charged with $4 million account fraud scheme

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Both executives indulged in the accounting fraud till November, says SEC.

Former Indian American CEO and CFO of a Chicago area-based consulting firm, who were earlier arrested in November on charges of inflating the financial condition of the company, have been indicted by U.S. Securities and Exchange Commission (SEC) with account fraud scheme.

According to the complaint filed by SEC on Friday in the US District Court for the Northern District of Illinois, former Indian American CEO of Quadrant 4 System Corporation, Nandu Thondavadi, and Chief Financial Officer Dhru Desai misled investors, diverting millions of dollars from the firm toward personal causes.

The SEC had also filed account fraud complaint and affidavit at U.S. District Court against Quadrant 4 System, last year. The new complaint accuses the executives of filing false and misleading quarterly, annual, and other reports, failing to make and keep accurate books and records, and internal accounting control failures.

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According to the complaint filed Friday in the court Thondavandi and Desai allegedly rerouted more than $4 million from the company account over a period of five years.

Desai has been charged with one count of wire fraud and one count of willfully certifying false financial reports.

An earlier complaint filed by SEC had stated that Thondavadi certified filings that misrepresented and concealed from the company’s auditors and shareholders the terms of certain acquisitions and the amount of a liability stemming from a lawsuit.

Both executives were arrested last November after their account fraud was busted by the SEC, which intentional misrepresentation of the company’s cash flow and concealed its liabilities in filings.

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The new complaint filed by the SEC states that both the executives indulged in the accounting fraud till November, which was when they were arrested.

Quadrant 4 System Corporation in December announced the expulsion both the executives and made the disclosure that the accounts of the company need a re-estimation as the existing one has been found flawed.

Both the executives are also charged with multiple violations, including fraud, falsifying books and records, lying to auditors, falsely certifying QFOR’s filings, and aiding and abetting QFOR’s alleged violations.

According to a SEC press release, “In a parallel action, the U.S. Attorney’s Office for the Northern District of Illinois today announced additional criminal charges against Thondavadi and Desai, including charges that Thondavadi and Desai attempted to obstruct the SEC’s investigation, lied to the SEC under oath, and paid two individuals to lie to the SEC in the course of its investigation.”

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The complaint also seeks the court for the return of the siphoned money plus interest and penalties against the company and the executives as well as officer-and-director bars against Thondavadi and Desai.

According to the Linkedin profile of Thondavadi, prior to being the CEO of Quadrant 4 System Corporation, he had served as Vice President for Coleman Cable Systems; as Director of the Corporate Technology Center, Square D Company / Groupe Schneider; and in various capacities with EDS. Thondavadi also served as Professor of Management at Northwestern University’s Kellogg School of Management for over 12 years.