Executives of Data Intelligence and Mobile Advertising Companies Charged in Connection with Accounting Fraud Scheme

United States Attorney for the Southern District of New York, Jay Clayton, and Assistant Director in Charge of the New York Field Office of the Federal Bureau of Investigation (“FBI”), Christopher G. Raia, announced today the unsealing of an Indictment charging ANIL MATHEWS, RAHUL AGARWAL, and KENNETH HARLAN with conspiracy and securities fraud. MATHEWS and AGARWAL were, respectively, the Chief Executive Officer and Chief Financial Officer of Near Intelligence, Inc. (“Near”), and HARLAN was the Chief Executive Officer of MobileFuse LLC (“MobileFuse”).  The charges in the Indictment arise from an alleged scheme to defraud investors in Near by fraudulently inflating the company’s revenue by approximately $25 million through a series of “round trip” transactions in which Near made inflated payments to MobileFuse, only for MobileFuse to pay the money back to Near.  MATHEWS and AGARWAL are also charged with wire fraud in connection with their separate schemes to embezzle money from Near, and MATHEWS is charged with aggravated identity theft in connection with his appropriation of the identities of others that he used to generate fake invoices to disguise his embezzlement.

MATHEWS was previously arrested in connection with these charges in France, where he fled during the pendency of this criminal investigation. The United States is seeking his extradition.  AGARWAL, an Indian citizen and resident, is at large. HARLAN was arrested earlier today and will be presented this afternoon before U.S. Magistrate Judge Robert W. Lehrburger.  

“As alleged, executives from Near and MobileFuse ran a circular payment scheme to inflate revenue and increase Near’s value,” said U.S. Attorney Jay Clayton.  “Our investors, businesses and employees depend on the integrity of our capital markets.  Market integrity is one of America’s great competitive advantages, and this Office will hold those who undermine that essential integrity to account.”

“These defendants not only allegedly recycled more than $25 million through each other’s businesses, but two of them also stole even more funds to maintain their personal lifestyles,” said FBI Assistant Director in Charge Christopher G. Raia.  “These defendants allegedly manipulated their executive positions within their respective companies to create a mirage of financial success and attract prospective buyers.  The FBI is determined to apprehend any individual who relies on fraudulent misrepresentations to improve their economic portfolio.”

According to the allegations in the Indictment unsealed today in Manhattan federal court:[1]

The defendants, from 2021 to December 2023, caused Near to fraudulently inflate its reported revenue by “round-tripping” money through MobileFuse, a private mobile advertising company founded and run by HARLAN.  The round-tripping scheme began before Near became a public reporting company, and MATHEWS and AGARWAL’s fraudulent inflation of Near’s revenue was designed, at least in part, to make Near look more attractive for acquisition by a Special Purpose Acquisition Company, or SPAC, to take Near public.  HARLAN, along with other senior MobileFuse executives, agreed to facilitate Near’s fraudulent inflation of its revenue by exchanging fake invoices along with inflated payments that allowed Near’s revenue from MobileFuse’s business to appear more than 10 times higher than it actually was, while MobileFuse “netted” out the roundtripped amounts and paid Near only what MobileFuse owed it for services actually rendered.  The defendants, and other senior executives at Near and MobileFuse, knew that Near was recognizing fake revenue that was based on these round-tripped amounts that originated at Near, rather than representing money MobileFuse legitimately owed Near for business services.

The fraudulent accounting practices instigated by the defendants and their co-conspirators caused Near to overstate its revenue by at least approximately $25 million.  At various times, Near’s revenue was falsely inflated by as much as approximately 28 percent, with the greatest inflations to Near’s revenue in 2022, just before it went public.  These inflated figures were relied on by the SPAC when it evaluated whether to acquire Near.  Near’s misrepresentations about its revenue, as orchestrated by the defendants and their co-conspirators, continued after it became a public reporting company.  Revenue inflated by MobileFuse’s round-tripped payments gave the appearance that Near was meeting its revenue projections, when, actually, Near would have failed to meet those projections without the round-trip payments.  In order to conceal Near’s fraudulent accounting practices, the defendants, and other senior executives at Near and MobileFuse, took steps to mislead the independent certified public accountants engaged to audit Near’s financial statements.

The round-tripping scheme unraveled a few months after Near began trading on the Nasdaq on or about March 24, 2023.  On or about October 5, 2023, Near announced an initial assessment that revenue may have been overstated and that its financial statements should not be relied on.  Near filed for bankruptcy in December 2023, less than nine months after its merger with the SPAC was completed.

The Round-Tripping Scheme

In January 2021, before the round-tripped payments began, MATHEWS and AGARWAL, along with another Near executive (“Near Executive-3”), invested $2 million in MobileFuse through a Singaporean private limited company in exchange for approximately 1.2 million Class B MobileFuse shares, which amounted to an approximately 10% equity stake in MobileFuse.  In the summer of 2023, shortly after Near became a public company, MobileFuse repurchased these Class B MobileFuse shares from MATHEWS, AGARWAL, and Near Executive-3 for only approximately $12,000. Effectively, therefore, the January 2021 “investment” amounted to a nearly $2 million payment from the Near executives to MobileFuse, and specifically, to HARLAN and his co-founder, the majority owners of MobileFuse.

A few months later, the round-tripped payments began.  MATHEWS, AGARWAL, and HARLAN coordinated the mechanics of the payments, which would begin with a large invoice from Near to MobileFuse followed by a “counter invoice” representing the amount MobileFuse would legitimately owe Near for services rendered on a monthly basis, plus the round-tripped amount that originated from Near. In accordance with this plan, from May 2021 to September 2023, Near and MobileFuse engaged in a series of similar transactions in which Near paid MobileFuse followed by reverse payments to Near on or about the same day in close but slightly greater amounts, the difference representing the amount MobileFuse legitimately owed to Near for actual services rendered.  The payments totaled approximately more than $25 million to MobileFuse, and approximately $27,750,000 to Near.

Near booked payments received from MobileFuse as revenue, even though the defendants knew that the payments Near received from MobileFuse lacked economic substance and merely reflected a return of money Near had previously paid MobileFuse the same day or the day before.  Near’s recognition of the fraudulently inflated revenue from the MobileFuse round-tripped transactions caused Near’s revenue to be overstated on its financial statements, including its audited financial statements from both before and after Near became a public company.

HARLAN knew that MobileFuse’s exchange of invoices with Near enabled Near to record increased revenue on its books and that this the increased revenue was fraudulent, and he acted accordingly.  Explaining the arrangement to other MobileFuse executives, HARLAN said “Basically [Near is] grossing up their revenue.”  MobileFuse, however, did not book the money it received from Near as part of the round-tripped transactions as revenue within its own financial statements.  Rather, MobileFuse “netted” the amount Near paid it against the amount it paid Near and recorded only the difference.  The result was that Near and MobileFuse accounted for the revenue from their mutual transfers differently.  HARLAN recognized that Near’s approach was highly misleading: on or about March 28, 2023, HARLAN texted MobileFuse Executive-2 to compare MobileFuse’s finances to Near’s: “Interesting note….we have more revenue than Near and obviously profitable both in 2022 and forecasted for 2023 and our revenue is real.”

The Embezzlement Schemes

MATHEWS and AGARWAL further enriched themselves at Near’s expense by embezzling money from the company.  From in or about May 2022, through in or about 2024, MATHEWS engaged in a scheme to embezzle hundreds of thousands of dollars from Near to pay rent for a luxury home located in Laguna Beach, California. MATHEWS took concerted efforts to conceal the embezzlement scheme from Near, its auditors, and its shareholders, including through the creation and use of fictitious invoices using misappropriated identities.  Similarly, from in or about 2021 to in or about 2022, AGARWAL also embezzled from Near by transferring funds equivalent to more than a million dollars to a Singaporean company owned by him, along with hundreds of thousands of dollars to a company owned by another Near executive (“Near Executive-3”).  Agarwal later facilitated a cover-up by causing Near’s finance department to transmit to Near’s independent auditors a fraudulent MobileFuse invoice to account for the transfers.

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A chart containing the names, ages, residences, charges, and maximum penalties for the individual defendants is attached.

The maximum potential sentences in this case are prescribed by Congress and provided here for informational purposes only, as any sentencing of the defendants will be determined by a judge.

Mr. Clayton praised the outstanding work of the FBI and further thanked the U.S. Securities and Exchange Commission.

The Justice Department’s Office of International Affairs is handling the extradition. 

This case is being handled by the Office’s Securities and Commodities Fraud Task Force.  Assistant U.S. Attorneys Nicholas Chiuchiolo and Allison Nichols are in charge of the prosecution. 

The charges contained in the Indictment are merely accusations, and the defendants are presumed innocent unless and until proven guilty.

Defendant	Age	Residence	Charges	Maximum Potential Sentence(s)
MATHEWS	51	Laguna Niguel, CA	Conspiracy to commit securities fraud, to make false statements in a registration statement, to make false statements in reports required to be filed by the SEC, improperly influencing the conduct of audits, and falsifying the books and records of a publicly traded company, 18 U.S.C. § 371 (Count One) Securities fraud, 15 U.S.C. §§ 78j(b) & 78ff (Count Two) Wire Fraud, 18 U.S.C. § 1343 (Count Three) Aggravated Identity Theft, 18 U.S.C. § 1028A	Five years 20 years 20 years Two years, mandatory consecutive
AGARWAL	40	India	Conspiracy to commit securities fraud, to make false statements in a registration statement, to make false statements in reports required to be filed by the SEC, improperly influencing the conduct of audits, and falsifying the books and records of a publicly traded company, 18 U.S.C. § 371 (Count One) Securities fraud, 15 U.S.C. §§ 78j(b) & 78ff (Count Two) Wire Fraud, 18 U.S.C. § 1343 (Count Five)	Five years 20 years 20 years
HARLAN	52	Princeton, NJ	Conspiracy to commit securities fraud, to make false statements in a registration statement, to make false statements in reports required to be filed by the SEC, improperly influencing the conduct of audits, and falsifying the books and records of a publicly traded company, 18 U.S.C. § 371 (Count One) Securities fraud, 15 U.S.C. §§ 78j(b) & 78ff (Count Two)	Five years 20 years