The CEO and CFO of a consulting firm based in northwest suburban Schaumburg are facing federal fraud charges for misrepresenting the company’s financial condition and lying to regulators.
Nandu Thondavadi, 62, the CEO of Quadrant 4 System Corp., and the firm’s CFO, 55-year-old Dhru Desai, were each charged with one count of wire fraud and one count of willfully certifying false reports, according to the U.S. Attorney’s office. Thondavadi also faces a charge of making false statements to the SEC.
The investigation was launched earlier this year based on indications the firm’s recent annual reports to the SEC contained false information, prosecutors said. Thondavadi allegedly lied under oath when questioned in May by the SEC about some of the falsehoods.
Prosecutors allege Thondavadi intentionally misrepresented the firm’s cash flow and concealed its liabilities in filings with the U.S. Securities and Exchange Commission. He certified filings that misrepresented and concealed from the company’s auditors and shareholders the terms of certain acquisitions and the amount of liability stemming from a lawsuit.
The misrepresentations and concealments were intended to artificially inflate the company’s share price, according to prosecutors.
Quadrant 4, a publicly traded company, has offices in seven U.S. states and India, and provides software products, platforms and consulting services to customers in the healthcare and education sectors.
Authorities executed a search warrant Wednesday morning at Quadrant 4’s corporate headquarters in the 1500 block of East Woodfield Road in Schaumburg, prosecutors said.
Thondavadi, of Barrington, and Desai, of Barrington, were arrested Wednesday morning, according to prosecutors. Both were scheduled to have their initial appearances at 11:30 a.m. Wednesday before U.S. Magistrate Judge Michael T. Mason.
The wire fraud and willfully certifying false financial report charges are each punishable by up to 20 years in prison, prosecutors said. Making false statements to the SEC is punishable by up to five years.
