A former startup CEO has pleaded guilty to laundering money from a fraud scheme that involved conning Qualcomm, one of the world’s leading semiconductor and telecommunication companies. Sanjiv Taneja, 60, of Cupertino, California, was the CEO of Abreezio, a technology company that was sold to Qualcomm for over $150 million in 2018.
However, Abreezio was not a genuine startup, but a fake company created by Karim Arabi, a former vice president of research and development at Qualcomm. Arabi had developed a faster method for evaluating micro-processors while working at Qualcomm, but he did not disclose it to his employer. Instead, he hid his involvement in Abreezio and claimed that the technology was invented by his sister, a Canadian graduate student.
Arabi also used sham email accounts and changed his sister’s name to conceal his identity. He recruited Taneja and two other co-defendants to run Abreezio and market the technology to Qualcomm. Taneja admitted that he never met Arabi’s sister and that she had no role in the company’s technical or strategic decisions. He also admitted that he asked Arabi for Qualcomm’s performance metrics to boost their sales pitch.
How Qualcomm fell for the scam
Qualcomm was interested in acquiring Abreezio’s technology, which promised to improve its “design for test” process for micro-processors. The process involves testing the functionality and quality of micro-processors before they are manufactured. Abreezio claimed that its technology could reduce the testing time and cost by 50%.
Qualcomm paid about $180 million for Abreezio, with $150 million in upfront cash. However, Qualcomm did not know that it was buying a technology that it already owned, since Arabi had developed it while working for Qualcomm. Arabi was still a Qualcomm employee when the deal was negotiated and closed in October 2018.
Qualcomm started investigating the transaction after discovering some irregularities and inconsistencies in Abreezio’s documents and patents. It found out that Arabi was behind Abreezio and that he had breached his employment agreements and fiduciary duties. Qualcomm sued Arabi and his co-defendants for fraud, breach of contract, and misappropriation of trade secrets.
How the defendants laundered the money
The defendants received millions of dollars from the sale of Abreezio to Qualcomm. They laundered the money through various means, such as foreign real estate purchases and interest-free loans. Taneja pleaded guilty to one count of money laundering related to a $1.5 million transaction involving proceeds of the fraud.
Taneja transferred $1.5 million from his bank account in California to an account in Hong Kong, which belonged to one of his co-defendants. The co-defendant then transferred the money back to Taneja’s account in California as a loan. Taneja used the money to buy a house in Cupertino.
Taneja is scheduled to be sentenced in October 2023. He faces up to 20 years in prison and a $500,000 fine. Arabi and another co-defendant are awaiting trial on charges of conspiracy, wire fraud, money laundering, and obstruction of justice. They face up to 30 years in prison and millions of dollars in fines.
