The highest executives of defunct cybersecurity firm GigaMedia Entry Corp. had been charged with duping buyers out of greater than $50 million by faking monetary statements and having one among them pose as a buyer.
Robert Bernardi, the founder and former chief government officer of GigaMedia, which additionally did enterprise as GigaTrust, Nihat Cardak, the corporate’s former chief monetary officer, and Sunil Chandra, its former vice chairman for worldwide enterprise improvement, had been arrested on fraud fees Wednesday morning and scheduled to look in federal court docket in Virginia later within the day, prosecutors in New York mentioned. They had been additionally sued by the Securities and Alternate Fee.
Bernardi, 68, and Cardak, 51, are accused of utilizing fabricated financial institution statements to acquire a number of rounds of loans and investments for the corporate, which filed for Chapter 7 chapter safety in November 2019. Prosecutors mentioned they made up faux statements that overstated the amount of money deposits, concocted false audit supplies that exaggerated the corporate’s efficiency and cast a letter from its attorneys.
The Securities and Alternate Fee headquarters in Washington, D.C.
Chandra, 80, was moreover charged with aggravated id theft for allegedly posing as one among GigaTrust’s clients in an effort to safe a $25 million mortgage to the corporate.
The three males couldn’t instantly be reached for remark, and attorneys for them couldn’t instantly be recognized.
In line with the SEC’s swimsuit, Bernardi advised one investor, a personal fund targeted on secondary choices within the expertise sector, that the corporate had as a lot as $16.6 million in money as of December 31, 2017, counted 400 firms of the Fortune 2000 amongst its energetic clients and had greater than $55 million in income in 2017.
The fund coordinated investments within the firm totaling $8.3 million based mostly on these representations, in line with the SEC. In actuality although, GigaMedia solely had $70,000 in money on the finish of 2017, fewer than 50 clients, and $1.5 million in 2017 income, the regulator mentioned.
“Bernardi and Cardak’s deceit relating to Giga’s buyer base, revenues and stability sheet was materials” to the choice to speculate, the SEC mentioned in its swimsuit. “Giga’s money on the stability sheet was vital” to the investor “as a result of it meant that the corporate was not liable to a liquidation occasion that would imperil the personal fund’s fairness funding.”
Bernardi, who based Herndon, Virginia-based GigaMedia in 2000, was ousted in 2019 together with Cardak after the corporate breached a mortgage settlement with one among its buyers. That investor then took management of the corporate and employed a third-party forensic accounting agency to conduct a restructuring. GigaMedia subsequently filed for chapter.
The legal case is U.S. v. Bernardi, 21-cr-616, U.S. District Courtroom, Southern District of New York. The civil case is Securities and Alternate Fee v. Bernardi, 21-cv-8598, U.S. District Courtroom, Southern District of New York.