Former CEO Of Email Security Company Sentenced To Five Years In Prison

Damian Williams, the United States Attorney for the Southern District of New York, announced today that ROBERT BERNARDI, the founder and former Chief Executive Officer of the Virginia-based email security company GigaMedia Access Corporation, d/b/a GigaTrust (“GigaTrust”), was sentenced to five years in prison by United States District Judge Paul G. Gardephe.  BERNARDI was sentenced for orchestrating a scheme to defraud investors and lenders of millions of dollars through false and misleading misrepresentations, including fabricated bank statements and audit reports, and by impersonating a purported customer, auditor, and GigaTrust lawyer.

U.S. Attorney Damian Williams said: “Robert Bernardi repeatedly lied and impersonated others in order to convince investors and lenders to fund his failing company.  Rather than admit that GigaTrust was underperforming, Bernardi concocted multiple schemes to keep the company afloat, defrauding investors and lenders out of millions.  Today’s sentence is a just consequence of Bernardi’s fraudulent actions”

According to the allegations in the Indictment and other filings and statements made in court:[1]

From in or about 2016 through at least in or about 2019, GigaTrust was a private company headquartered in Virginia that purported to be a market-leading provider of cloud-based content security solutions.  BERNARDI founded GigaTrust and served as its CEO.  BERNARDI, along with two co-defendants, NIHAT CARDAK and SUNIL CHANDRA, devised a scheme to defraud investors and lenders by (i) fabricating and disseminating false and misleading bank account statements that overstated GigaTrust’s cash deposits; (ii) fabricating and disseminating false and misleading audit materials that purported to have been issued by GigaTrust’s auditors and overstated GigaTrust’s performance; (iii) forging and disseminating a false and misleading letter purporting to be from GigaTrust’s New York-based counsel; and (iv) impersonating or causing others to impersonate a purported customer and auditor of GigaTrust on telephone calls with a prospective lender. 

Specifically, BERNARDI sent fabricated audit materials to a New York-based investment firm, and BERNARDI and CARDAK used fabricated bank statements to obtain multiple rounds of loans and investments for GigaTrust worth millions of dollars.  After a New York-based bank (“Bank-1”), which had loaned GigaTrust $25 million, declared that GigaTrust had defaulted on the terms of its loan agreement, BERNARDI and CARDAK induced additional investments in GigaTrust through, among other things, forging a letter purporting to be from GigaTrust’s New-York based counsel.  Shortly thereafter, while negotiating another $25 million deal with a lender (“Lender-1”), BERNARDI and CARDAK devised a scheme to impersonate a GigaTrust customer and auditor on requested diligence calls, which induced Lender-1 to make a $25 million loan to GigaTrust.  BERNARDI recruited CHANDRA to pose as one of GigaTrust’s alleged customers on a call with Lender-1.  BERNARDI and CARDAK also fabricated bank statements and sent them to Lender-1 right before closing the $25 million deal. 

GigaTrust filed for Chapter 7 bankruptcy protection in the District of Delaware on or about November 27, 2019.

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In addition to his prison term, BERNARDI, 68, of McLean, Virginia, was sentenced to three years of supervised release and ordered to forfeit $3,442,264 and to pay restitution to his victims.

Mr. Williams praised the outstanding investigative work of the Federal Bureau of Investigation in this case.  Mr. Williams further thanked the Securities and Exchange Commission, which has separately filed a civil enforcement action against the defendants, for its assistance in the investigation. 

This case is being handled by the Office’s General Crimes Unit.  Assistant U.S. Attorneys Peter J. Davis and Emily A. Johnson are in charge of the prosecution.

NIHAT CARDAK pled guilty on January 12, 2023, and is scheduled to be sentenced on May 16, 2023.  The charges contained in the Indictment are merely accusations as to SUNIL CHANDRA, and CHANDRA is presumed innocent unless and until proven guilty.