Four charged with tricking Qualcomm into buying $150m startup
(2022/08/11)
- Reference: 1660222810
- News link: https://www.theregister.co.uk/2022/08/11/arabi_qualcomm_indictment/
- Source link:
The US Department of Justice has charged four people with conspiring to fraudulently sell a startup for $150 million to a San Diego based multinational tech company that The Reg has identified as Qualcomm.
The DoJ claims this was despite the fledgling company's supposedly proprietary tech having been developed by Qualcomm staff, and allegedly aided by inside access to Qualcomm.
The indictment [1]claims that Qualcomm's now ex-vice president of research and development Karim Arabi created new microchip technology unbeknownst to his then main employer in 2015. Meanwhile, it goes on to allege, another former Qualcomm vice president, Akbar Shokouhi, helped fund and support the development of a resultant business, Abreezio LLC, via three different entities he controlled.
[2]
Under Arabi's contract, the indictment says, "he was bound by agreements generally providing that intellectual property he created during his period of employment would belong to" his employer, Qualcomm.
[3]
[4]
The intellectual property Abreezio is said to have developed includes "IP and EDA tools focused on PPA optimization in advanced technology nodes," according to [5]the Linkedin bio of a company exec.
[6]Qualcomm revises mobile chip sales on weaker retail outlook
[7]Qualcomm, GlobalFoundries double down on US chip production
[8]Chip startup alleges Cadence sabotaged processor rollout
[9]Apple's guy in charge of stopping insider trading guilty of … insider trading
The indictment alleges that some Qualcomm VPs, along with Abreezio's appointed CEO Sanjiv Taneja, obscured Arabi's role in developing the tech due to provisions in his contract that stated inventions made during employment belonged to Qualcomm.
Instead, the group marketed the [10]invention as being the brainchild of a Canadian graduate student, Sheida Alan, and the company as an angel-funded Silicon Valley-based design IP startup.
The Canadian-grad-student-Angel-investor narrative was marketed to Qualcomm to entice them to purchase Abreezio, the DoJ claims.
[11]
But according to the indictment, unsealed on 9 August, Alan was Arabi's "younger sister."
Court documents allege Arabi was the one who filed the provisional patents under Alan's name, and was secretly involved in most Abreezio matters, even choosing the company name.
The crew sought to hide his involvement, using sham email accounts and even having Arabi impersonate his sister, the indictment alleges.
[12]
Meanwhile, the company relied on Arabi to provide intel on Qualcomm, allege prosecutors. Court documents allege Teneja asked Arabi for insight on comparable technology to better market Abreezio.
In October 2015, Abreezio was acquired by Qualcomm for $150 million, with Qualcomm under the assumption all parties involved with the technology had been disclosed. The DoJ says Alan received almost $92 million, Taneja took over $10 million and two of Shokouhi's entities received $24 million.
According to the indictment, the defendants laundered the money through foreign real estate and interest-free loans.
On Tuesday August 9, charges were unsealed against Alan, Arabi, Taneja and Shokouhi. All but Alan were arrested. Alan awaits extradition proceedings from Canada. A superseding indictment
Shokouhi pled not guilty later that day. The pleas of the other defendants have not yet been registered.
The defendants face up to 20 years in jail and fines of $250,000 or twice the pecuniary gain/loss for the fraud charges or $500,000 for the money laundering charges. They also must forfeit property derived from the fraud.
The Register has asked Qualcomm for its response and will update accordingly. ®
Get our [14]Tech Resources
[1] https://www.justice.gov/usao-sdca/pr/four-charged-150-million-fraud-san-diego-technology-company
[2] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_offbeat/legal&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=2&c=2YvUnugbTBDhx9Fn4djSwtAAAAJQ&t=ct%3Dns%26unitnum%3D2%26raptor%3Dcondor%26pos%3Dtop%26test%3D0
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[5] https://www.linkedin.com/in/brad-quinton-489a423/?originalSubdomain=ca
[6] https://www.theregister.com/2022/07/28/qualcomm/
[7] https://www.theregister.com/2022/08/08/globalfoundries_qualcomm_us/
[8] https://www.theregister.com/2022/08/03/chip_upstart_alleges_cadence_sabotaged/
[9] https://www.theregister.com/2022/07/01/apple_lawyer_insider_trading/
[10] https://patents.justia.com/inventor/sheida-alan
[11] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_offbeat/legal&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=4&c=44YvUnugbTBDhx9Fn4djSwtAAAAJQ&t=ct%3Dns%26unitnum%3D4%26raptor%3Dfalcon%26pos%3Dmid%26test%3D0
[12] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_offbeat/legal&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=3&c=33YvUnugbTBDhx9Fn4djSwtAAAAJQ&t=ct%3Dns%26unitnum%3D3%26raptor%3Deagle%26pos%3Dmid%26test%3D0
[13] https://regmedia.co.uk/2022/08/11/unsealed_indictment.pdf
[14] https://whitepapers.theregister.com/
The DoJ claims this was despite the fledgling company's supposedly proprietary tech having been developed by Qualcomm staff, and allegedly aided by inside access to Qualcomm.
The indictment [1]claims that Qualcomm's now ex-vice president of research and development Karim Arabi created new microchip technology unbeknownst to his then main employer in 2015. Meanwhile, it goes on to allege, another former Qualcomm vice president, Akbar Shokouhi, helped fund and support the development of a resultant business, Abreezio LLC, via three different entities he controlled.
[2]
Under Arabi's contract, the indictment says, "he was bound by agreements generally providing that intellectual property he created during his period of employment would belong to" his employer, Qualcomm.
[3]
[4]
The intellectual property Abreezio is said to have developed includes "IP and EDA tools focused on PPA optimization in advanced technology nodes," according to [5]the Linkedin bio of a company exec.
[6]Qualcomm revises mobile chip sales on weaker retail outlook
[7]Qualcomm, GlobalFoundries double down on US chip production
[8]Chip startup alleges Cadence sabotaged processor rollout
[9]Apple's guy in charge of stopping insider trading guilty of … insider trading
The indictment alleges that some Qualcomm VPs, along with Abreezio's appointed CEO Sanjiv Taneja, obscured Arabi's role in developing the tech due to provisions in his contract that stated inventions made during employment belonged to Qualcomm.
Instead, the group marketed the [10]invention as being the brainchild of a Canadian graduate student, Sheida Alan, and the company as an angel-funded Silicon Valley-based design IP startup.
The Canadian-grad-student-Angel-investor narrative was marketed to Qualcomm to entice them to purchase Abreezio, the DoJ claims.
[11]
But according to the indictment, unsealed on 9 August, Alan was Arabi's "younger sister."
Court documents allege Arabi was the one who filed the provisional patents under Alan's name, and was secretly involved in most Abreezio matters, even choosing the company name.
The crew sought to hide his involvement, using sham email accounts and even having Arabi impersonate his sister, the indictment alleges.
[12]
Meanwhile, the company relied on Arabi to provide intel on Qualcomm, allege prosecutors. Court documents allege Teneja asked Arabi for insight on comparable technology to better market Abreezio.
In October 2015, Abreezio was acquired by Qualcomm for $150 million, with Qualcomm under the assumption all parties involved with the technology had been disclosed. The DoJ says Alan received almost $92 million, Taneja took over $10 million and two of Shokouhi's entities received $24 million.
According to the indictment, the defendants laundered the money through foreign real estate and interest-free loans.
On Tuesday August 9, charges were unsealed against Alan, Arabi, Taneja and Shokouhi. All but Alan were arrested. Alan awaits extradition proceedings from Canada. A superseding indictment
[13]PDF
charges the lot with fraud and money laundering offenses.Shokouhi pled not guilty later that day. The pleas of the other defendants have not yet been registered.
The defendants face up to 20 years in jail and fines of $250,000 or twice the pecuniary gain/loss for the fraud charges or $500,000 for the money laundering charges. They also must forfeit property derived from the fraud.
The Register has asked Qualcomm for its response and will update accordingly. ®
Get our [14]Tech Resources
[1] https://www.justice.gov/usao-sdca/pr/four-charged-150-million-fraud-san-diego-technology-company
[2] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_offbeat/legal&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=2&c=2YvUnugbTBDhx9Fn4djSwtAAAAJQ&t=ct%3Dns%26unitnum%3D2%26raptor%3Dcondor%26pos%3Dtop%26test%3D0
[3] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_offbeat/legal&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=4&c=44YvUnugbTBDhx9Fn4djSwtAAAAJQ&t=ct%3Dns%26unitnum%3D4%26raptor%3Dfalcon%26pos%3Dmid%26test%3D0
[4] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_offbeat/legal&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=3&c=33YvUnugbTBDhx9Fn4djSwtAAAAJQ&t=ct%3Dns%26unitnum%3D3%26raptor%3Deagle%26pos%3Dmid%26test%3D0
[5] https://www.linkedin.com/in/brad-quinton-489a423/?originalSubdomain=ca
[6] https://www.theregister.com/2022/07/28/qualcomm/
[7] https://www.theregister.com/2022/08/08/globalfoundries_qualcomm_us/
[8] https://www.theregister.com/2022/08/03/chip_upstart_alleges_cadence_sabotaged/
[9] https://www.theregister.com/2022/07/01/apple_lawyer_insider_trading/
[10] https://patents.justia.com/inventor/sheida-alan
[11] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_offbeat/legal&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=4&c=44YvUnugbTBDhx9Fn4djSwtAAAAJQ&t=ct%3Dns%26unitnum%3D4%26raptor%3Dfalcon%26pos%3Dmid%26test%3D0
[12] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_offbeat/legal&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=3&c=33YvUnugbTBDhx9Fn4djSwtAAAAJQ&t=ct%3Dns%26unitnum%3D3%26raptor%3Deagle%26pos%3Dmid%26test%3D0
[13] https://regmedia.co.uk/2022/08/11/unsealed_indictment.pdf
[14] https://whitepapers.theregister.com/
badflorist
"...supposedly proprietary tech having been developed by Qualcomm staff,"
Doesn't mean anything. Does Adobe pay Microsoft for using their proprietary io drivers? How about Nvidia?
Where were the lawyers?
aerogems
Not condoning fraud in any way, but where were Qualcomm's lawyers in all this? Shouldn't the basic due diligence on any M&A type agreement turn up this sort of thing? They take it to the CEO and/or Board when they think something is wrong, the VP is escorted out by some friendly security types, and they are given some time to reflect upon their actions while waiting for the inevitable legal shitstorm to come raining down from their former employer. It should have never gotten to the point where the company actually paid for something unless someone was asleep at the switch.
Lis
@aerogems
I totally agree with you which, to my cynical mind, means they haven't got everyone who was involved. I reckon at least one other person is shitting themselves incase one of the other 4 grasses on them.
I guess it's a cultural thing
I'm always disturbed to see names published when no conviction occurred yet. Presumption of innocence should prevail, right? With their names published on the web from where nothing really disappear, their reputation is now tarnished whatever the result of the incoming trial.