Two top Indian-American former executives of a Chicago-area information technology company have been charged by the US federal regulator in an accounting fraud scheme in which they misled investors and siphoned millions of dollars from the firm for their personal benefit.

Nandu Thondavadi, 63, of Illinois was the CEO of Schaumburg-based Quadrant 4 System Corporation (QFOR) while Dhru Desai, 55, was its chief financial officer.

The Securities and Exchange Commission (SEC) has charged the duo as well as Quadrant 4 System in the accounting fraud scheme.

The SEC's complaint, filed yesterday in the US District Court for the Northern District of Illinois, alleges that Thondavadi and Desai siphoned off more than USD 4 million from the company over a nearly five-year period.

The former executives are also alleged to have caused the company to understate its liabilities and inflate its revenues and assets, evading scrutiny by lying to the company's auditors and providing them with forged and doctored documents.

Both were earlier arrested on December 1 last year in the US for allegedly misrepresenting their company's finances to inflate its stock price.

According to the SEC's complaint, the alleged scheme continued until November 2016, when Thondavadi and Desai were arrested and criminally charged with fraud. QFOR announced their resignations in December 2016 and disclosed that the company's financial reports could no longer be relied upon and required a restatement.

"As alleged in our complaint, Thondavadi and Desai perpetrated a multi-faceted scheme to mislead investors about QFOR's financial condition and secretly enrich themselves," said David Glockner, Director of the SEC's Chicago regional office.

The SEC's complaint charges QFOR with filing false and misleading quarterly, annual, and other reports, failing to keep accurate books and records, and internal accounting control failures.

Subject to court approval, and without admitting or denying the allegations, QFOR consented to an order to permanently enjoin the company from further anti-fraud, reporting, books and records, and internal control violations.

Thondavadi and Desai are charged with multiple violations, including fraud, falsifying books and records, lying to auditors, falsely certifying QFOR's filings, and aiding and abetting QFOR's alleged violations. In a parallel action, the US Attorney's Office for the Northern District of Illinois also announced additional criminal charges against Thondavadi and Desai, including charges that Thondavadi and Desai attempted to obstruct the SEC's investigation, lied to the SEC under oath, and paid two individuals to lie to the SEC in the course of its investigation.

The SEC's complaint seeks injunctions and return of allegedly ill-gotten gains plus interest and penalties against the company and the former executives as well as officer-and- director bars against Thondavadi and Desai.