The U.S. federal court in San Diego announced the indictment that a former vice president of Qualcomm and three others were suspected of defrauding the chip giant, involving a total of $150 million.
A federal grand jury was indicted in May, but it was recently unsealed. The indictment alleges that the four defendants orchestrated a scheme to defraud Qualcomm after Karim Arabi, Qualcomm’s former vice president of research and development, thought about “designing for testing” while working at Qualcomm. A faster way to evaluate microprocessor performance.
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According to Arabi’s employment agreement, the intellectual property he created while working at Qualcomm belongs to the company. The indictment alleges that Arabi and three others took carefully planned steps to cover up his involvement in the fraud. They describe the invention as the brainchild of a Canadian graduate student and commercialized by a startup in the San Francisco Bay Area.
In fact, the graduate student was Araby’s sister, Sheida Alan. The indictment alleges that Allen studied subjects related to inkjet printing, not semiconductor design. In the process, Allen legally changed her name, according to prosecutors, even though she was listed as the inventor of provisional patents filed by Arabi using a fake email account to disguise his identity.
The indictment also alleges that Arabi, 56, was involved in the startup’s founding, including making phone calls and attending meetings, choosing a company name, and hand-picking the CEO. He allegedly took steps to cover up his involvement, including setting up fake email accounts.
Arabi is understood to have withheld the information during negotiations before Qualcomm bought the eight-month-old startup in October 2015. Arabi left in June 2016 after nine years on and off at Qualcomm.
Arabi and Ali Akbar Shokouhi have been arrested in Santiago. Prosecutors said Shokuhi was an entrepreneur and consultant who was involved in the process of making the startup look legitimate. He was also a former Qualcomm employee. Shokuhi pleaded not guilty when arraigned in federal court in San Diego and was released on $1 million bail. For unknown reasons, Araby was unable to appear in court.
Sanjiv Taneja, the startup’s chief executive and a key player in the negotiations was arrested in Northern California. Araby’s sister Alan was arrested in Canada and is now facing extradition to the United States.
If convicted, all four charged face up to 20 years in prison and a fine of $250,000 or twice their fraudulent earnings. The indictment also alleges that the four laundered money through a scheme that included the purchase of foreign real estate and interest-free loans, which could result in a $500,000 fine and property forfeiture.
“Fraudsters cannot hide behind sophisticated technology or sophisticated conspiracies,” U.S. Attorney Randy Grossman said in a statement. “We will go after criminals and their money laundering and illicit proceeds, whether they are Hidden in mattresses, or scattered in the international financial system.”
The indictment does not specifically identify Qualcomm, which is described as a San Diego-based multinational technology company. But in 2017, Qualcomm sued Arabi, Taneja, and Allen in San Diego Superior Court, making essentially the same allegations.
“Protecting intellectual property is the cornerstone of innovation. We thank the U.S. Department of Justice for its work in this case,” Qualcomm said in a statement.
