DoJ charges four over $150m dupe of tech firm
DoJ charges individuals for fraud and money laundering | Microchip technology allegedly marketed to victim company by insider.
The US Department of Justice (DoJ) has charged four individuals with fraud and money laundering offences based on an alleged scheme to dupe a victim firm into paying $150 million for microchip technology.
According to the charges, which were unsealed yesterday, August 9, the four defendants fooled a San Diego-based company into paying millions of dollars for Abreezio, a tech startup.
Karim Arabi (“Karim”) and Ali Akbar Shokouhi were arrested yesterday in San Diego, while Sanjiv Taneja was arrested in the Northern District of California. A fourth defendant was arrested in Canada, where she faces proceedings to extradite her to the US.
Abreezio owned technology that had secretly been created and provisionally patented by an individual who was serving as president of research and development at the victim company.
One individual allegedly marketed the startup’s microchip technology to the victim company in 2015, claiming that the technology was invented by a Canadian graduate student working in an unrelated field.
Insider operation
However, it was not disclosed that a family member related to the graduate student, Karim Arabi—who was working at the victim company—was intimately involved in Abreezio’s formation, development and marketing, said the DoJ.
“In truth, per court documents, Karim filed the provisional patents upon which Abreezio’s core technology was based; called and attended key operations meetings among the defendants and other Abreezio principals (but not the purported inventor); and choreographed key steps in the new company’s development—including the selection of Taneja as CEO and picking the name ‘Abreezio’,” it added.
According to the DoJ, Arabi’s role was concealed because his employment agreements provided that his inventions during his employment would belong to his employer.
The indictment further alleged that Arabi provided important inside information about the victim company’s existing technology to be used in the marketing pitch and created sham email accounts to impersonate the purported inventor.
Concealed involvement
The defendants also allegedly worked to conceal the involvement of another defendant, Shokouhi, who had been a vice president at the victim company up until 2014.
In October 2015, the victim company purchased Abreezio for $150 million and, as part of the transaction, was “told that Abreezio was the sole and exclusive owner of its technology, and that everyone involved in the conception and development of Abreezio’s intellectual property had been disclosed”, said the DoJ.
The indictment also alleged that the defendants laundered the funds they received from the Abreezio purchase via foreign real estate purchases and interest-free loans.
The charges subject the defendants to possible maximum statutory penalties of 20 years in prison, and fines of $250,000 or twice the pecuniary gain/loss for the fraud charges or $500,000 for the money laundering charges.
Acting special agent in charge Darren Lian of IRS Criminal Investigation’s Los Angeles field office said: “Intellectual property crime threatens our economic wellbeing, and this indictment demonstrates that we will pursue those who attempt to steal and profit from our nation’s innovations.
“Schemes like this not only victimise companies, but also impact our US Patent and Trademark Office and our civil courts. IRS Criminal Investigation is proud to work with our law enforcement partners to bring these defendants to justice.”
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