IT biz embezzlement brouhaha leaves bloke with $456k migraine
Backer charged in connection with alleged $4.1m corporate fraud scandal
An investor in an IT biz has coughed up $456,000 after America's financial watchdog accused him of looking the other way while executives at the consultancy he backed allegedly embezzled millions of dollars.
Late last week, Bhusan Dandawate was charged [PDF] by the SEC with allegedly aiding and abetting fraud – after he was said to have let Quadrant 4 CEO Nandu Thondavadi and CFO Dhru Desai cook the company's books to steal more than $4.1m between 2015 and 2016.
Based out of Shaumberg, Illinois, in the US, Quadrant 4 offered consulting and software development support for retail, financial, and medical companies. The firm is still operating, and has been under new management since the November 2016 arrests of Thondavadi and Desai.
Dandawate was accused of helping the two embezzle money from the business by falsely claiming to own ten shell companies that Thondavadi and Desai were using to shift money out of the company. Additionally, the SEC alleged that Dandawate helped the duo set up false payments and produce phony audit confirmation letters to help cover up the fraud.
In exchange for this, it is said Dandawate received $122,000 in cash, benefited from Quadrant 4's stock price rising thanks to the fraudulent reports, and had debt liability he jointly held with Thondavadi and Desai paid off.
Last month, Quadrant 4 reached a deal [PDF] with the SEC to settle its part in the case and enter Chapter 11 bankruptcy protection. The watchdog's case against Thondavadi is ongoing. Also last month, Desai agreed to settle his part in the SEC lawsuit by forking out roughly $1.6m.
To end his involvement in this matter, Dandawate will pay the SEC $131,466 and a civil penalty of $325,000. He will also agree to a permanent bar on serving as an officer or director of a publicly traded company, and will agree to an order forbidding him from future violations of US securities law. ®