The Securities and Exchange Commission announced fraud charges Tuesday against Baba Nadimpalli, co-founder and former CEO of SKAEL Inc., a San Francisco-based private technology company that developed business automation software.
Between January 2021 and February 2022, Nadimpalli raised more than $30 million from investors by falsely claiming that SKAEL had millions of dollars in annually recurring revenue, which was more than 10 times the actual number, according to the SEC complaint.
Nadimpalli falsely claimed to investors that SKAEL's customers included some well-known companies, according to the complaint, and he forged bank statements to show nonexistent payments from customers.
The SEC also alleges Nadimpalli spent hundreds of thousands of dollars of the company's money on personal expenses, including house and car payments.
The complaint charges Nadimpalli with violating the antifraud provisions of the federal securities laws and seeks permanent injunctions, including a conduct-based injunction, disgorgement plus prejudgment interest, civil penalties and an officer-and-director bar.
"Startup founders cannot fake it until they make it by falsifying revenue metrics shared with investors," said Monique Winkler, Director of the SEC's San Francisco regional office, in a statement. "While the SEC will continue to aggressively pursue private company executives who use falsehoods to raise money from investors, we also urge those who invest in private companies to remain vigilant."
Along with the SEC's complaint filed in U.S. District Court for the Northern District of California, the U.S. Attorney's Office for the Northern District of California announced criminal charges against Nadimpalli.
Attempts to contact Nadimpalli for comment were unsuccessful.
