SAN FRANCISCO — A U.S. District Court judge on Friday sentenced a former Silicon Valley tech entrepreneur to serve 1½ years in federal prison for duping investors into backing a software-as-a-service company he founded, according to authorities.
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Manish Lachwani, 47, of Los Altos, pleaded guilty to two counts of wire fraud and one count of securities fraud in April 2023, the U.S. Attorney’s Office said in a news release.
Lachwani founded HeadSpin Inc. in 2015 and served as its chief executive officer until May 2020. The company provided clients with software tools and access to remote devices to test mobile applications.
Between April 2017 and April 2020, HeadSpin raised more than $100 million from investors.
To obtain that financing, Lachwani admitted he provided investors with information about the company’s business, customers, revenue and finances he knew was inaccurate, the U.S. Attorney’s Office said, citing Lachwani’s plea agreement.
Lachwani also admitted he knowingly sent HeadSpin’s accountant false information about customer contracts that was incorporated into the company’s financial statements, as well as invoices Lachwani knew had been changed to show amounts that had not actually been invoiced to clients, according to authorities.
“This defendant admitted he lied about his company’s revenue and customers to attract funding from investors, including many in Silicon Valley,” U.S. Attorney Ismail J. Ramsey said in a statement. “Today’s sentencing should send a message to other entrepreneurs who may be tempted to cross the line into fraud and to ‘fake it until they make it.’”
Lachwani was replaced as CEO of Headspin when the allegations came to light in 2020.
In addition to the prison term, Lachwani was ordered to pay a $1 million fine and serve three years of supervised release, which will begin after his prison term is completed.
A hearing to address the matter of restitution has been scheduled for July 31, 2024.