Co-founder of mobile dev biz HeadSpin Manish Lachwani charged with fraud
The US Department of Justice and the SEC on Wednesday charged the former CEO and co-founder of mobile development testing biz HeadSpin with defrauding investors. The government’s complaint [ PDF], filed in a federal district court in San Jose, California, contends that Manish Lachwani, who helped found HeadSpin in nearby Palo Alto in 2015 and served as its CEO until May 2020, raised money by overstating the company’s financial performance. “We allege that Lachwani misled investors into believing that HeadSpin had achieved a ‘unicorn’ valuation by winning hundreds of lucrative deals, including many with Silicon Valley’s biggest and most high profile companies,” said Monique Winkler, Associate Regional Director of the SEC’s San Francisco Regional Office, in a statement. “Companies and their executives must tell the truth when speaking about financial metrics that are material to the value of the business.” A unicorn valuation, in the context of a privately held company, is one that reaches a billion dollars or more. Examples include Reddit, Discord, and Graphcore. The complaint says that from 2018 through 2020, Lachwani fraudulently boosted HeadSpin’s valuation above $1bn “by falsely inflating the company’s key financial metrics and doctoring its internal sales records.” It further asserts Lachwani used the inflated figures to get investors to pour about $80m into the company during that period, enabling him to collect $2.
