Bay Area software CEO pleads guilty to tax, pandemic relief fraud
Some of the CEO's employees were subjected to IRS audits, authorities said, because the income they reported did not line up with the pay information the company gave to the government.
A Dublin man who served as CEO of multiple Bay Area software companies has been sentenced to two years in prison after failing to pay millions of dollars in employment taxes and defrauding the COVID-19 relief paycheck program.
Kishore Kethineni pleaded guilty in February to tax evasion and conspiracy, according to a news release from U.S. Attorney for the Northern District of California, Ismail Ramsey. Court documents showed that Kethineni collected more than $2 million in employment taxes from his employees but did not pay them to the government. He also fraudulently obtained $3.1 million under the federal Paycheck Protection Program.
Kethineni was the owner of four software companies involved in the scheme: BiteGate, Dinenamics, Neelinfo, and TechPMC. Federal authorities said his brothers also owned three other companies involved: Boxstertech, Hiretechforce, and TechGlobalSystems.
Each of the businesses were small consulting and software companies.
Between April 2020 and May 2021, Ramsey said in the statement, the brothers conspired to submit falsified payroll records and “fraudulent representations” to obtain the loans. The COVID-19 pandemic relief program provided forgivable loans to small businesses to allow them to continue paying their employees.
Instead, Kethineni directed “significant amounts” of this money to himself and his family members, according to the release. Together, Ramsey said, the brothers submitted 12 applications — many of which were virtually identical.
In addition to the PPP fraud, Kethineni also admitted to withholding over $2 million in employment taxes from 2014 to 2018, but failing to pay them to the government. Some of his employees were subjected to IRS audits, Ramsey said, because the income they reported did not line up with the pay information the company gave to the federal government.
Kethineni was charged with one count of failure to pay over employment tax, and one count of conspiracy to commit bank fraud. He pleaded guilty to both counts, and will be forced to pay more than $3.29 million in restitution, plus a $15,000 fine. He will also serve two years of supervised release. after the prison term.
The U.S. Attorney’s release did not specify the status of any cases involving Kethineni’s brothers.
Federal authorities earlier this month announced a 2½-year prison sentence for a Castro Valley man who had fraudulently obtained some $1.6 million in pandemic unemployment benefits.