Indian American executives of Schaumburg, Ill.-based software and consulting firm Quadrant 4 Systems Nandu Thondavadi and Dhru Desai were arrested Nov. 30 on charges of fraud and certifying false financial reports.

Chief executive officer Thondavadi, 62, and chief financial officer Desai, 55, allegedly misrepresented the publicly-traded company’s finances to inflate its stock price, according to a Chicago Tribune report.

The duo was charged with wire fraud and certifying the financial reports relating to a pair of acquisitions and the settlement of a lawsuit against the company in 2013, the Tribune report said.

Additionally, the CEO is facing another charge in which he allegedly made false statements to the Securities and Exchange Commission in May while the commission investigated the company’s financial practices.

Thondavadi and Desai were in federal court in Chicago Nov. 30 to hear the charges. If convicted, they would each face 20 years. Thondavadi would face another five years for the SEC charges.

A bond hearing for both is scheduled for Dec. 2.

Launched in 2010, the company 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, the Tribune said, citing financial filings.

The complaint alleges that Quadrant 4 misrepresented its acquisitions of Teledata Technology Solutions and Momentum Mobile in 2013, overstating the value of the deals.

The Teledata deal said the company 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.

In late 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, Downtown Capital Partners, the report said.

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.

At the time, Thondavadi and Desai were the largest individual shareholders of the company, according to the complaint.

When the SEC questioned Thondavadi in May about his potential interests in Core Information Technology Solutions, a major Quadrant 4 client, the CEO denied having any financial control or ownership interest in CITS, despite evidence to the contrary presented by the SEC, according to the complaint cited in the report.

Quadrant later filed an amended annual report acknowledging related party transactions with CITS, which the complaint alleges resulted in $1.4 million in net transactions with Quadrant 4 in 2015, the Tribune said.

Quadrant 4 has offices in seven states and India.

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