HeadSpin CEO Manish Lachwani Pleads Guilty to Wire Fraud and Securities Fraud Charges
- He presented false financial information while the company raised more than $100 million, Department of Justice says.
An Indian American entrepreneur pleaded guilty last week to wire fraud and securities fraud charges in connection with his scheme to dupe potential investors into supporting the technology start-up he founded and led. Manish Lachwani of Los Altos, California, founder and former CEO of HeadSpinm admitted that he presented false financial information to lure investments into his company while it raised more than $100 million, the Department of Justice said in an April 27 press release.
The 47-year-old founded the Silicon Valley-based company in 2015. It provided clients with software tools and access to devices to test mobile applications, and “raised more than $100 million from investors over multiple rounds of fundraising, leading to a valuation of approximately $1.1 billion,” the DoJ said. He serves as its CEO until May 2020.
According to the plea agreement, Lachwani acknowledged that while HeadSpin was raising money, he provided prospective investors with information about the company’s business, customers, revenue, and finances. He admitted that he provided prospective investors with inflated ARR numbers and overstated revenue numbers. Additionally, he “maintained and controlled an ARR spreadsheet that contained this false information and which he shared with potential investors.”
Lachwani is charged with 11 counts of wire fraud, one count of money laundering, and four counts of securities fraud. He pleaded guilty to two counts of wire fraud and one count of securities fraud. “If he complies with the plea agreement, the remaining counts will be dismissed at sentencing,” scheduled for Sept. 27, the DoJ said. He is currently released on bond.