April 26 :
Manish Lachwani, a tech entrepreneur from Silicon Valley, was convicted of wire and securities fraud and sentenced to 18 months in jail. He built a software-as-a-service (SaaS) company that deceived potential investors into backing it.The United States District Judge Charles R. Breyer, who is senior, handed down the punishment.

On April 23, 2023, Lachwani, a 47-year-old defendant from Los Altos, California, admitted guilt on two counts of wire fraud and one count of securities fraud. A superseding indictment from August 2022 had levied charges of money laundering, wire fraud, and securities fraud against him.

His plea deal states that Lachwani started HeadSpin, Inc. in 2015 and was its CEO until May of 2020. The software tools and remote devices made available by HeadSpin allowed clients to test mobile applications, among other things. The money for HeadSpin came in at over $100 million from backers between April 2017 and April 2020. In order to secure that funding, however, Lachwani confessed to giving prospective investors false information regarding the company's operations, clients, income, and debts.

For instance, Lachwani confessed to sending prospective investors financial documents that he knew exaggerated HeadSpin's income and annual recurring revenue (ARR). ARR is a way to measure a company's subscription revenue rate at a specific moment in time, and it's adjusted to show how much money the company would make in a full year at that rate. Specifically, he confessed that he was aware that the revenue and ARR figures he presented to investors were inflated. These figures included amounts from prospective customers who had not committed to paying HeadSpin's subscription fees, amounts from actual customers who had agreed to pay more than what was actually paid, and amounts from customers who had ceased using and paying for HeadSpin's services.

Along with incorporating fake information about customer contracts into HeadSpin's financial accounts, Lachwani admittedly provided HeadSpin's accountant changed bills to indicate sums that had not really been billed to clients and sent deliberately incorrect information about customer contracts.

Following Lachwani's incarceration, Judge Breyer mandated that he spend three years of supervised release. A hearing on reparations was set for July 31, 2024, by Judge Breyer, and Lachwani was also fined $1 million.

Tech entrepreneur's 18-month prison term handed down for securities and wire fraud