SEC Charges IT Services Company With Accounting Fraud
The Securities and Exchange Commission has charged Quadrant 4 System Corp. and two former top executives in an alleged accounting fraud scheme that misled investors and allowed the former executives to siphon $4 million from the IT services provider for their personal benefit.
Quadrant 4 says the alleged scandal involved former leaders who have resigned from the company, and the business is now working to right itself via potential asset sales.
The alleged scandal, involving former CEO Nandu Thondavadi and former CFO Dhru Desai, stretched on for nearly five years — leading Quadrant 4 to inflate its revenues and assets, and understate its liabilities, the SEC claims. Thondavadi and Desai were arrested and criminally charged with fraud in November 2016. Both executives resigned in December 2016.
ChannelE2E has been unable to reach the two defendants for comment.
Quadrant 4: Selling Off Assets?
Quadrant 4 System Corp. is working to distance itself from the alleged fraudsters. The company says it:
- has reached a partial settlement with the SEC;
- is reorganizing under Chapter 11 bankruptcy protection; and
- plans to sell off certain assets, according to a recent statement from the company.
In fact, Quadrant 4 System says it has already received signed asset purchase agreements for certain business units from “reputable and stable organizations.”
The potential asset sales “will be subject to approval during the Chapter 11 process and help guarantee the continuation of the company’s services to customers and other interested parties,” current CEO Robert H. Steele said in a prepared statement.
Quadrant 4 System Corp.’s business units include QSource — a global services division spanning the U.S., India and additional offshore teams. The division focuses on product development, solutions and staffing.