Nandu Thondavadi, 63, of Illinois was the CEO of Schaumburg-based Quadrant 4 System Corporation (QFOR) while Dhru Desai, 55, was its chief financial officer.
The Securities and Exchange Commission (SEC) has charged the duo as well as Quadrant 4 System in the accounting fraud scheme.
The SEC's complaint, filed yesterday in the US District Court for the Northern District of Illinois, alleges that Thondavadi and Desai siphoned off more than USD 4 million from the company over a nearly five-year period.
Both were earlier arrested on December 1 last year in the US for allegedly misrepresenting their company's finances to inflate its stock price.
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According to the SEC's complaint, the alleged scheme continued until November 2016, when Thondavadi and Desai were arrested and criminally charged with fraud. QFOR announced their resignations in December 2016 and disclosed that the company's financial reports could no longer be relied upon and required a restatement.
The SEC's complaint charges QFOR with filing false and misleading quarterly, annual, and other reports, failing to keep accurate books and records, and internal accounting control failures.
Subject to court approval, and without admitting or denying the allegations, QFOR consented to an order to permanently enjoin the company from further anti-fraud, reporting, books and records, and internal control violations.
Thondavadi and Desai are 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.
The SEC's complaint seeks injunctions and return of allegedly ill-gotten gains plus interest and penalties against the company and the former executives as well as officer-and- director bars against Thondavadi and Desai.
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