An Indian-origin tech entrepreneur has been sentenced for fraud and another has been arrested in a separate case, according to the Justice Department.
Manish Lachwani, the co-founder of Headspin, was arrested on Tuesday and charged with securities fraud, Stephanie Hinds, the acting federal prosecutor in San Francisco announced on Wednesday.
Prosecutors alleged that he exaggerated the company's revenues while it was seeking investments in the startup when he served as its CEO.
This caused the company's valuation to jump to $1.1 billion but it dropped to $300 million when the overstatement of the revenue was discovered, prosecutors said in their complaint.
Before the discrepancy was found, investors had already made investments in the company, according to the prosecutors.
Headspin bills itself on its website as "the world's first Digital Experience AI (artificial intelligence) Platform."
It said the company offers "global testing, performance monitoring, and QoE (quality of experience) management platform to help organisations assure optimal digital experiences across mobile and web delivery channels.)
Mukund Mohan, who acknowledged on his Twitter feed that "I am (likely) the world's most stupid person," was sentenced to two years in prison by a federal judge for fraudulently getting $1.8 million in government aid to help companies affected by the Covid-19 crisis, the department said on Tuesday.
He had admitted in March before a federal judge to the fraud.
He was accused of filing fake documents claiming to have dozens of employees at a company called Mahenjo Inc for whom he had paid millions in wages as well as taxes while the company had no employees or business activity.
He also claimed to have other companies and filed eight applications for federal Covid-19 relief loans totalling $5.5 million, but only five had been approved and he had collected only $1.8 million.
According to his LinkedIn biodata, he had worked in senior positions with Microsoft and Amazon, but he had left the companies several years ago.
He described himself as an "investment literacy coach" on his website and his Twitter feed provided a steady stream of business news till Tuesday night.
