- Kishore Kethineni, of Dublin, California, admitted to conspiring with his two brothers to engage in fraudulently obtaining over $3.1 million in loans under the Paycheck Protection Program.
An Indian American software development executive has been sentenced to two years in prison for two years on tax and conspiracy charges. Kishore Kethineni, CEO of multiple software development and IT services companies in California’s Bay Area, pleaded guilty to the charges on Feb. 21, admitting that “he conspired with his two brothers to engage in a scheme in which they fraudulently obtained over $3.1 million in loans under the Paycheck Protection Program (PPP),” the Department of Justice announced last week.
Kethineni, of Dublin, was the sole owner and CEO of four of the companies involved in the scheme: BiteGate, Inc., Dinenamics, Inc., Neelinfo, Inc., and TechPMC, Inc. His brothers were the owners of the three other companies involved: Boxstertech, Inc., Hiretechforce, Inc., and TechGlobalSystems, Inc.
According to an Aug. 25 DOJ press release, starting from April 2020 through May 2021, Kethineni and his brothers “submitted multiple PPP loan applications on behalf of their various respective companies, in which they made fraudulent representations and provided falsified payroll data and records to obtain loans and loan forgiveness under the program.” Collectively, Kethineni and his brothers submitted at least 12 PPP loan applications on behalf of their seven companies, the DOJ said.
The applications, which were “sometimes virtually identical, resulted in the approval and funding of nine loans totaling over $3.1 million in PPP funds,” the DOJ said. Upon receipt of the PPP loan funds, Kethineni redirected significant amounts to himself and his family members instead of using the funds for payroll and other authorized business expenses under the program.
The PPP is a COVID-19 pandemic relief program administered by the Small Business Administration (SBA) that provided forgivable loans through third-party lenders to small businesses for payroll and certain other expenses.
Kethineni also admitted to willfully failing to account for and pay over employment taxes that his company, Neelinfo, Inc., had withheld from the pay of its employees, “incurring an employment tax liability of over $2 million over the course of five years (from 2014 through 2018), the DOJ said. Despite receiving prepared tax forms each quarter, he did not file them with the IRS, nor did he pay over any employment taxes on behalf of the company, while still causing it to make thousands of dollars in other expenditures. Due to Kethineni’s failure to file any employment tax forms or pay over the company’s employment taxes as required, some of its employees were subject to audits and inspection by the IRS after filing income tax returns.
In addition to the prison term, Edward J. Davila, United States District Judge also ordered Kethineni to serve two years of supervised release — to begin after the prison term — and to pay over $3 million in restitution, and a $15,000 fine. The court also ordered entry of a money forfeiture in the amount of $3,186,315.00.