SEC Charges Former CEO and CFO of Software Company with Multimillion Dollar Fraud

October 20, 2021/US SEC

The Securities and Exchange Commission charged Robert Bernardi, founder and former CEO of GigaMedia Access Corporation (Giga), Nihat Cardak, former CFO of Giga, and Sunil Chandra, Giga’s former VP of Business Development, with fraudulently raising tens of millions from investors.

The SEC’s complaint alleges that Bernardi and Cardak told potential investors and lenders that Giga had revenues over $50 million, a solid balance sheet with at least $18 million in available cash, and a promising new product that already had many customers. In reality, according to the complaint, Giga had revenues of a little over $1 million, less than $1 million in available cash, and far fewer customers than it represented to investors. The complaint alleges that Bernardi and Cardak fabricated documents to support their false statements. The complaint further alleges that after an investor requested to speak with a Giga customer, Bernardi arranged for the investor to speak with Chandra, who pretended to be an employee at a company Bernardi claimed was a Giga customer. Bernardi and Cardak, with Chandra’s assistance, allegedly raised more than $37 million in debt and equity from investors through these false representations. A portion of the funds allegedly went to Bernardi’s children.

The SEC’s complaint, filed in federal court in Manhattan, charges Bernardi and Cardak with violating the antifraud provisions of Section 17(a) of the Securities Act of 1933 and Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder. The complaint charges Chandra with aiding and abetting Bernardi and Cardak’s violations, and names as relief defendants Bernardi’s children who allegedly received investor funds. The complaint seeks permanent injunctions, disgorgement with prejudgment interest, civil penalties, and officer and director bars.

In a parallel action, the U.S. Attorney’s Office for the Southern District of New York filed criminal charges against Robert Bernardi, Nihat Cardak and Sunil Chandra.

The SEC’s investigation was conducted by Sean Whittington and D. Ashley Dolan and supervised by Melissa Robertson of the SEC’s Washington, DC office. The SEC’s litigation will be led by Melissa Armstrong and supervised by Frederick Block. The SEC appreciates the assistance of the U.S. Attorney’s Office for the Southern District of New York and the FBI.

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