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Former Execs of Cybersecurity Firm GigaTrust Charged With Financial Fraud

Three former executives of now defunct cybersecurity company GigaTrust have been charged for defrauding investors and lenders in a $50 million fraud scheme.

The charges, announced on Wednesday by the U.S. Justice Department, target Robert Bernardi, the Virginia-based company’s founder and CEO, Nihat Cardak, the firm’s chief financial officer, and Sunil Chandra, former VP of business development.

Founded in 2001, GigaTrust provided endpoint email security and document in-use protection solutions to enterprises and government organizations. The company filed for bankruptcy protection in late 2019.

By 2016, GigaTrust had already raised more than $46 million from investors. However, according to prosecutors, between 2016 and 2019, Bernardi, Cardak and Chandra obtained an additional tens of millions of dollars from banks, lenders and investors by using fake documents and by impersonating various individuals.

“The defendants devised a scheme to defraud investors and lenders by (a) fabricating and disseminating false and misleading bank account statements that overstated GigaTrust’s cash deposits; (b) fabricating and disseminating false and misleading audit materials that purported to have been issued by GigaTrust’s auditors and overstated GigaTrust’s performance; (c) forging and disseminating a false and misleading letter purporting to be from GigaTrust’s New York-based counsel; and (d) impersonating or causing others to impersonate a purported customer and auditor of GigaTrust on telephone calls with a prospective lender,” the Justice Department said.

Bernardi and Cardak have been charged with conspiracy to commit securities fraud, conspiracy to commit bank fraud, conspiracy to commit wire fraud, and aggravated identity theft. Chandra has been charged with conspiracy to commit wire fraud affecting a financial institution and aggravated identity theft. Some of these charges carry a maximum prison sentence of 30 years.

This is not the first time cybersecurity firm executives have been charged with fraud in the United States. Authorities last year announced charges against Adam Rogas, the founder and CEO of fraud prevention and protection company NS8. Rogas has been accused of using fake financial records to raise $123 million, of which he pocketed at least $17.5 million.

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Eduard Kovacs (@EduardKovacs) is a contributing editor at SecurityWeek. He worked as a high school IT teacher for two years before starting a career in journalism as Softpedia’s security news reporter. Eduard holds a bachelor’s degree in industrial informatics and a master’s degree in computer techniques applied in electrical engineering.