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Schaumburg Consulting Firm CEO Arrested on Fraud Charges

The chief executive of a publicly-traded consulting firm has been charged in federal court with fraudulently misrepresenting the company’s financial condition and lying to regulators.

Nandu Thondavadi, the CEO of Schaumburg-based Quadrant 4 System Corp., intentionally misrepresented the firm’s cash flow and concealed its liabilities in filings with the U.S. Securities and Exchange Commission, according to a criminal complaint and affidavit filed in U.S. District Court in Chicago.  Thondavadi certified filings that misrepresented and concealed from the company’s auditors and shareholders the terms of certain acquisitions and the amount of a liability stemming from a lawsuit, the complaint states.  The misrepresentations and concealments were intended to artificially inflate the company’s share price, according to the complaint.

The complaint charges Thondavadi and Quadrant 4’s chief financial officer, Dhru Desai, with one count of wire fraud and one count of willfully certifying false financial reports.  Thondavadi faces an additional charge of making false statements to the SEC.

Thondavadi, 62, of North Barrington, and Desai, 55, of Barrington, were arrested on Wednesday, November 30.  They were scheduled to make their initial court appearances yesterday before U.S. Magistrate Judge Michael T. Mason.

Also on Wednesday morning, federal authorities executed a search warrant at Quadrant 4’s corporate headquarters in the 1500 block of East Woodfield Road in Schaumburg.

Quadrant 4 has offices in seven U.S. states as well as India.  It provides software products, platforms and consulting services to customers in the healthcare and education sectors.  As a publicly traded company, Quadrant 4 is required to provide to the SEC on a quarterly and annual basis a detailed report of its financial condition.

Federal authorities launched an investigation of the company earlier this year based on indications that the firm’s recent annual reports to the SEC contained false information, the complaint states.  The investigation revealed that Thondavadi and Desai certified the reports even though they knew the documents did not fairly present the true financial condition of the company, according to the complaint.  Thondavadi then lied under oath when questioned by the SEC in May about some of the falsehoods, the complaint states.