Deepak Jain Charged With Major Fraud By U.S. Agency

Vasanth Sridharan is among U.S. Department of Justice prosecutors charging Deepak Jain fraudulently won $11 million in government contracts

October 19, 2024

This week, a jury in Washington DC charged Deepak Jain with “major fraud against the United States.“ Jain, 49-years-old, allegedly made “false statements to the U.S. Securities and Exchange Commission (SEC) for his alleged participation in a scheme to deceive the SEC into thinking his company’s data center was certified at the highest rating level for reliability, availability, and security, when it was not,” according to a news release by the Department of Justice.

Jain, of Potomac, Maryland, was the CEO of an unnamed information technology services company that provided data center services to customers, including the SEC. From 2012 through 2018, the SEC paid Jain’s company about $11 million for the use of its data center in Beltsville, Maryland.

“Federal contracts from the SEC over that time period and totaling that amount were awarded to AiNet, a Beltsville company specializing in data-center services,” according to the Wall Street Journal.

“As alleged in the indictment, Jain orchestrated a years-long scheme to defraud the SEC by falsely certifying that his company’s data center met the highest rating level, when the actual rating did not satisfy the SEC contract,” Nicole M. Argentieri, head of the Justice Department’s Criminal Division, said in a statement. “Jain allegedly sought to enrich himself and his company at the expense of the reliability, availability, and security of the SEC’s electronic data.”

Jain is charged with six counts of major fraud against the United States and one count of making false statements. If convicted, he faces a maximum penalty of 10 years in prison on each count of major fraud and a maximum penalty of five years in prison on the making false statements count.

“Deepak Jain and his company performed fully under the SEC contract,” Steve McCool, an attorney for Jain said in a statement. “There is no evidence that any data was lost or compromised in any way. Mr. Jain is an innocent man who looks forward to confronting these charges at trial.”

The indictment alleges that Jain created an entity called Uptime Council, which purported to inspect and audit data centers. In order to obtain the SEC data center contract and conceal that his company did not meet the SEC contract’s requirements, “Jain allegedly drafted Uptime Council certification letters, which falsely claimed Uptime Council had certified” that Jain’s company’s data center met “the highest possible rating for reliability, availability, and security,” the Department of Justice alleged in its statement. Throughout the life of the contract between Jain’s company and the SEC, the statement added, “the SEC experienced several issues”, including issues with security, cooling, and power, “all of which were subjects of the standard referenced in the fraudulent Uptime Council certification letters.”

The case against Jain is being prosecuted by Vasanth Sridharan and Spencer Ryan of the Criminal Division’s Fraud Section of the Department of Justice.

It is not known if Jain secured the SEC contract after registering his business as a minority contractor. Also, not known is whether the allegations against Jain resulted from a whistle blower’s complaint. According to the Department of Justice, “Whistleblowers may receive up to 30 percent of the first $100 million in net proceeds forfeited, and up to 5 percent of any net proceeds forfeited between $100 million and $500 million.”

Nicole M. Argentieri, head of the Justice Department’s Criminal Division, said in a statement, that the charges against Jain “make clear that the Criminal Division will not tolerate fraud schemes that threaten the security of the government’s electronic data.”