Karim Arabi, the former vice president of research and development at Qualcomm, faces fraud charges for the sale of his startup to Qualcomm. Arabi allegedly developed and monetized Qualcomm’s intellectual property while employed by the chip giant. His startup was sold in 2015 for €145 million ($150 million).
The US Department of Justice is prosecuting Arabi and several others for fraudulent conduct surrounding the sale of startup Abreezio, according to The Los Angeles Times.
Arabi allegedly used his working hours at Qualcomm to develop a chip technology he would later incorporate into his own startup. According to the US prosecutor’s office, Arabi deliberately hid the work from his employer. He later co-founded startup Abreezio with Akbar Shokouhi, another former Qualcomm VP. The technology concerns “IP and EDA tools for PPA optimization in advanced tech nodes”.
Arabi’s sister, Sheida Alan, funded the startup as an angel investor. Alan was later employed as a developer. Abreezio CEO Sanjiv Taneja allegedly contributed to the scheme as well. Arabi and his collaborators later sold the company to Qualcomm.
Breach of Qualcomm contract
Arabi went against Qualcomm’s contractual terms. The terms stated that all the intellectual property he developed during his employment at Qualcomm was the property of Qualcomm.
The legal documents show that Arabi went above and beyond to hide his actions from Qualcomm. He registered temporary patents in his sister’s name and was secretly involved in various matters surrounding the startup, including the conception of its name.
To hide his involvement, Arabi would use fake email accounts and impersonate his sister. He also allegedly used his position at Qualcomm to adapt the startup’s strategy to the needs of the chip manufacturer, in hopes of a later sale.
Qualcomm essentially ended up buying its own technology back. The chip giant paid $150 million for Abreezio. $92 million went directly to Arabi’s sister. CEO Sanjiv Taneja received $10 million and $24 million was invested into two companies owned by co-founder Akbar Shokouhi. The money was allegedly laundered through interest-free loans and investments.
All four suspects were charged with fraud and money laundering. If found guilty, they could face up to 20 years in prison and fines of $250,000. Sheida Alan was arrested in Canada and awaits extradition to the United States. Akbar Shokouhi confessed to fraud. The situation of the other suspects, including Arabi, is unclear.