Dhru Desai, left, chief financial officer and chairman of Schaumburg-based Quadrant 4 System, and Nandu Thondavadi, CEO, were charged with wire fraud and certifying false financial reports related to two acquisitions and the settlement of a lawsuit against the company in 2013.
Dhru Desai, left, chief financial officer and chairman of Schaumburg-based Quadrant 4 System, and Nandu Thondavadi, CEO, were charged with wire fraud and certifying false financial reports related to two acquisitions and the settlement of a lawsuit against the company in 2013.
CHICAGO (Diya TV) — Indian-American executives of the Schaumburg, Il.-based software and consulting firm Quadrant 4 Systems were arrested Nov. 30 on charges of fraud and certifying false financial reports.
Nandu Thondavadi, the company’s chief executive, and chief financial officer Dhru Desai, allegedly misrepresented the company’s finances to inflate its stock value, according to a report from the Chicago Tribune.
Thondavadi faces an additional charge of making false statements to the Securities and Exchange Commission in May during an investigation into the company’s financial practices. The duo appeared together in Chicago federal court Wednesday morning to have their charges read to them, which carry a maximum penalty of 20 years each for wire fraud and certifying false financial reports. Thondavadi faces an additional 5 years for allegedly making false statements to the SEC.
They are being held in federal custody, and have a bond hearing scheduled for Friday morning.
Quadrant 4, which launched in 2010, provides software and consulting services to healthcare and education customers. The firm reported $52 million in revenues and a net loss of $516,000 for 2015, according to financial filings.
However, the federal complaint alleges Quadrant 4 misrepresented its acquisitions of Teledata Technology Solutions and Momentum Mobile in 2013, overstating the value of the deals. In the Teledata purchase, for example, the company said in financial statements it paid the seller 3 million shares of Quadrant 4 stock, when the actual agreement called for a payment of 475,000 shares, according to the complaint.
Toward the end of 2013, Quadrant 4 began making cash payments on a $1.75 million settlement after a court ruled it had breached a financing agreement with a New York-based lender. Quadrant 4 allegedly misrepresented the settlement in financial statements as a payment of 1.87 million shares of its stock to enhance its cash position to investors, according to the complaint.
Thondavadi and Desai were the largest individual shareholders of the company at the time, according to the complaint.
