Source: US FBI
SAN FRANCISCO – Baba Nadimpalli, the founder and former Chief Executive Officer of SKAEL, Inc. (SKAEL), pleaded guilty in federal court yesterday to one count of securities fraud and one count of wire fraud in connection with a scheme to defraud investors by misleading them about the company’s revenue, annual recurring revenue (ARR), and other financial and sales information.
Nadimpalli, 42, a citizen of Australia who previously resided in San Francisco, was indicted by a federal grand jury on Jan. 17, 2024. According to his plea agreement, Nadimpalli founded SKAEL in 2016 and served as its Chief Executive Officer from 2016 until July 2022. SKAEL was a San Francisco-based, software-as-a-service company that provided corporate clients with artificial intelligence and automation software to assist with mundane, time-intensive tasks by building “Digital Employees.” SKAEL earned revenue by charging implementation fees for the building of Digital Employees and subscription fees for their use once built.
From January 2020 until about February 2022, SKAEL raised over $40 million in three rounds of financing. In order to induce prospective and existing investors to invest, Nadimpalli provided false information regarding SKAEL’s customer and sales information, revenue, and ARR. Nadimpalli knew that ARR, which reflected the company’s monthly subscription revenue times 12, was an important metric for investors in considering their investments in SKAEL. In or around 2021, Nadimpalli provided materially false information to investors in advance of their investments in SKAEL, including representing that SKAEL was receiving ARR from certain companies that did not subscribe to its software and services; overstating ARR from certain customers who were SKAEL customers; and representing that customers who had terminated their subscriptions were current customers with ARR.
In or around February 2022, SKAEL raised approximately $30 million in a Series A preferred stock offering that valued SKAEL at approximately $230 million after closing. In connection with the stock offering, Nadimpalli directed the creation of an electronic data room for potential investors that contained (1) a spreadsheet that Nadimpalli maintained that contained materially false information about the company’s ARR and customers; (2) materially false financial statements; and (3) an investor presentation that contained materially false information about the company’s ARR, revenue, and customer adoption.
Nadimpalli further admitted to providing an investor and a financial employee with false bank account information that included purported customer payments that had not actually been deposited.
United States Attorney Craig H. Missakian and FBI Special Agent in Charge Sanjay Virmani made the announcement.
Nadimpalli is scheduled to be sentenced by Senior U.S. District Judge Charles R. Breyer on Sept. 17, 2025. He faces a maximum penalty of 20 years in prison and a $5 million fine for the count of securities fraud in violation of 15 U.S.C. §§ 78j(b) & 78ff and 17 C.F.R. § 240.10b-5, and 20 years in prison and a $250,000 fine for the count of wire fraud in violation of 18 U.S.C. § 1343. Any sentence will be imposed by the court after consideration of the U.S. Sentencing Guidelines and the federal statute governing the imposition of a sentence, 18 U.S.C. § 3553.
Assistant U.S. Attorneys Noah Stern and Ilham Hosseini are prosecuting this case with the assistance of Mark DiCenzo and Lynette Dixon. The prosecution is the result of an investigation by the FBI. The U.S. Attorney’s Office and the FBI thank the San Francisco Regional Office of the Securities and Exchange Commission, which also filed a civil enforcement action against Nadimpalli in the Northern District of California.