Qualcomm was apparently the victim of a sophisticated fraud. The Los Angeles Times reports the federal government revealed charges against former Qualcomm research VP Karim Arabi and three others for allegedly tricking the chip maker into spending $150 million in 2015 to acquire technology that it already had. After Arabi developed a quicker method of testing processors, the four launched a scheme to falsely claim that a Canadian graduate student (Arabi’s sister) had invented the technique and was commercializing it through a startup. Arabi purportedly hid his involvement through the entire process (his sister even changed her name), leading Qualcomm to buy the startup even though it legally owned the executive’s inventions.
Arabi left Qualcomm in June 2016. Prosecutors further alleged that the quartet laundered money through methods that included interest-free loans and purchasing foreign real estate. The penalties could be steep if the court convicts Arabi’s group. Each could face up to 20 years in prison and fines of either $250,000 or double whatever they gained through the fraud scheme.
Qualcomm sued Arabi, his sister and the startup’s CEO in 2017. That case was dismissed without prejudice in 2018, opening the door to another lawsuit, but the company didn’t discuss the possibility of another suit in a statement to The Times.