San Diego, CA–Charges unsealed Wednesday against four individuals, including two San Diego residents, allege that they defrauded a multinational San Diego technology company in its $150 million purchase of a tech start-up controlled by the defendants.
Karim Arabi, 56, of San Diego, and Ali Akbar Shokouhi, 63, of San Diego were taken into custody by local authorities, while Sanjiv Taneja, 59 of Cupertino, CA was arrested in the Northern District of California. A fourth person was arrested in Canada, where she faces proceedings to extradite to the United States.
All four individuals are named in a superseding indictment, which charges them with fraud and money laundering offenses based on the quartet’s alleged scheme to dupe a San Diego technology company into paying $150 million for technology that Arabi secretly created and provisionally patented while serving as a vice president of research and development at the company. The charges subject the defendants to possible maximum statutory penalties of 20 years in prison; fines of $250,000 or twice the pecuniary gain/loss for the fraud charges or $500,000 for the money laundering charges; and the forfeiture of property which constitutes or is derived from proceeds of the fraud offenses and all property traceable to such property, as well as forfeiture of all property involved in the money laundering offenses.
Per the superseding indictment, as Abreezio LLC’s CEO, Taneja marketed Abreezio LLC’s valuable new microchip technology to the company in 2015. Taneja and his associates claimed throughout the marketing process that Abreezio’s valuable new technology was invented by a Canadian graduate student working in an unrelated field. But no one disclosed that Arabi—the graduate student’s family member, and a specialist in the same field as Abreezio’s technology, then working at the company—was intimately involved in Abreezio’s formation, development, and marketing. In truth, per court documents, Arabi 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); choreographed key steps in the new company’s development—including the selection of Taneja as CEO and picking the name “Abreezio.”
The defendants concealed Arabi’s key role in Abreezio from the company because, as detailed in the superseding indictment, Arabi’s employment agreements provided that his inventions during his employment would belong to his employer, the victim company. By hiding his participation in Abreezio, the defendants were able to pitch the new company as “an angel-funded Silicon Valley-based design IP start-up” entitled to a hefty fee for its valuable technology, while disguising the company’s own legal rights to the very same technology.
The indictment alleges that Arabi hid his hand in Abreezio, in part, by creating sham email accounts to impersonate the purported inventor. Arabi, Taneja, and Shokouhi even called Arabi by the purported inventor’s name in some of their communications to mask Karim’s role.
Abreezio also relied on Arabi to provide important inside information about the company’s existing technology, to be used in honing Abreezio’s marketing pitch. In February 2015, per court documents, Taneja emailed Arabi asking for insight on the company’s “numbers” for comparable technology in place to identify “the ‘threshold’ we need to cross at [the victim company]” and “help us calibrate our positioning going in[.]”
The defendants also worked to hide Shokouhi’s involvement in Abreezio, per charging documents. Shokouhi had been a vice president at the company as recently as 2014, and funded and supported Abreezio’s development via three different entities that he controlled. One of Shokouhi’s companies was never disclosed to the company during due diligence, however—an attempt to avoid scrutiny, in part because the company had flagged conflict of interest issues with Shokouhi and the undisclosed company the year before the Abreezio sale.
In October 2015, the company purchased Abreezio for $150 million. As part of the transaction, the company 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. In reality, the defendants had carefully concealed Arabi,’s role from the company. As a result, the company paid nearly $92 million to Arabi’s family member (the purported inventor), over $10 million to Taneja, and more than $24 million to two entities controlled by Shokouhi.
The indictment also alleges how the defendants laundered the funds they received from the Abreezio purchase, including via foreign real estate purchases and interest-free loans.
“Fraudsters cannot hide behind sophisticated technology or complex schemes,” said U.S. Attorney Randy Grossman. “This office will pursue criminals and their laundered, ill-gotten gains whether they are hidden in a mattress or scattered throughout the international financial system. Those who steal from our community will face justice.”
“Corporate fraud is a serious crime with serious consequences, not only hurting the individual organization but also impacting shareholders, as well as entire communities,” said Acting Special Agent in Charge Thomas Ryan of the FBI’s San Diego Field Office. “Today’s arrests confirm that no matter how criminals try to hide, the FBI will work with our law enforcement partners to fully investigate these crimes – we will uncover the truth; we will find the perpetrators; we will pursue justice for the victims.”