The Securities and Exchange Commission today announced fraud charges against Baba Nadimpalli, the co-founder and former CEO of SKAEL Inc., a San Francisco-based private technology company that developed business automation software.
According to the SEC’s complaint, from January 2021 through 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 true amount. The complaint also alleges that Nadimpalli falsely suggested to investors that SKAEL’s customers included a number of well-known companies, and, further, that Nadimpalli forged bank statements to show nonexistent payments from customers. Nadimpalli also allegedly spent hundreds of thousands of dollars of SKAEL’s money on his own personal expenses, including payments on his house and car.
“Startup founders cannot fake it until they make it by falsifying revenue metrics shared with investors,” said Monique C. Winkler, Director of the SEC’s San Francisco Regional Office. “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.”
The SEC’s complaint, filed in U.S. District Court for the Northern District of California, charges Nadimpalli with violating the antifraud provisions of the federal securities laws. The complaint seeks permanent injunctions, including a conduct-based injunction, disgorgement plus prejudgment interest, civil penalties, and an officer-and-director bar.
In a parallel action, the U.S. Attorney’s Office for the Northern District of California (USAO) today announced criminal charges against Nadimpalli.
The SEC’s investigation was conducted by Matthew Meyerhofer and Ellen Chen and supervised by Jason H. Lee and Ruth L. Hawley, all of the San Francisco Regional Office. The litigation will be conducted by John Han and Mr. Meyerhofer. The SEC appreciates the assistance of the USAO and the FBI.
