A former executive at a San Jose-based tech company and two of his colleagues are facing charges for their alleged involvement in a years-long multi-million-dollar fraud scheme. The suspects, Kevin Chao, Richard Sze, and Suryanarayana Murthy Bobba, are accused of masterminding a plot that defrauded their former employer, violating their duty of loyalty and obligation to disclose outside business dealings.
According to the announcement, the three suspects allegedly directed millions of dollars in business to entities they controlled and secretly diverted over $2 million in software license fees to themselves. The intricate scheme involved their control of a software firm called Zillsoft, which they hid from their employer. Millions of dollars in software development contracts were channeled to Zillsoft, with Chao, Sze, and Bobba pocketing the subsequent profits. Chao alone reportedly profited about $5.4 million from these illicit arrangements.
The conspirators did not stop there. They allegedly sold Zillsoft to another company that did work for their former employer to further enrich themselves, all while keeping their involvement under wraps. In another part of the scheme, Chao and Sze created an additional business, SPSoft China, to funnel contracts and payments from their employer, again without any disclosure of their financial interests.
The deception continued with Chao and Bobba arranging for their employer to obtain a software license for a program, only to secretly divert more than $2 million of the sums earmarked for that purpose to themselves.
As the charges stand, Chao faces a maximum sentence of 20 years in prison for wire fraud, while his alleged co-conspirators Bobba and Sze each face up to 5 years in prison for their participation in the conspiracy. All three also potentially face fines of $250,000, plus restitution if deemed appropriate by the court.