Andrew Warner, Securities Fraud, New York 2022

State: New York
Category: Fraud &#038; Financial Crimes
Source: <a href="https://www.justice.gov/usao-sdny/pr/senior-executives-telecom-company-charged-accounting-fraud-scheme" style="color:#cc0000;" target="_blank" rel="nofollow noopener">DOJ Press Release ÃƒÂ¢Ã¢â‚¬Â Ã¢â‚¬â€

Two high-ranking executives at a major telecom company have been charged in a shocking accounting fraud scheme, accused of inflating the company’s financial metrics to sell at a higher price.

According to a federal indictment, Andrew Warner, the former Chief Financial Officer of Mobileum, Inc., and Kishore Vangipuram, the former Chief of Delivery, conspired to deceive an investment firm into overpaying for the company as part of a private equity transaction.

The scheme, which allegedly began in September 2021, involved falsifying financial metrics, including revenue and unbilled revenue, to create the illusion of robust growth and operational efficiency. In March 2022, the investment firm acquired Mobileum at an inflated enterprise value of $915 million.

As part of the scheme, Warner and Vangipuram directed employees to transfer hours from non-billable projects to billable projects, artificially reducing the ‘level of effort’ for projects to create the false appearance that billable work had been performed.

As a result of the scheme, Warner received approximately $5.2 million in cash, stock, and other proceeds, while Vangipuram received approximately $5.5 million.

The case has been assigned to U.S. District Judge J. Paul Oetken, and both defendants have been arrested. Warner surrendered in San Jose, California, on Friday, while Vangipuram was arrested at the San Francisco International Airport.

The investigation was led by the FBI, with assistance from the U.S. Attorney’s Office for the Southern District of New York. The case highlights the importance of corporate accountability and the need for transparency in financial dealings.

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