Technology company Headspin’s co-founder and ex-CEO Manish Lachwani was arrested over securities fraud and wire fraud charges, the U.S. Department of Justice said.

Lachwani was suspected to have filed false revenue from November 2019 to January 2020’s end, a federal complaint said.

Also, he allegedly overstated the company’s key financial metrics and told workers to put revenue from potential clients that asked but have actually not used Headspin, from former customers who are not working with Headpin anymore, and from current clients who do business that is lower than the revenue reported.

The former CEO was also suspected to have given fake information to investors, which exaggerated the annual recurring revenue of the company by an estimate of $51 to $55 million.

The company has reported $95.3 million revenues, which was found in a May 2020 audit to reach a total of just around $26.3 million in the first half last year.

Furthermore, the company said its net income is at $3.7 million. The review discovered that Headspin’s cumulative net loss from the start through the first half of last year has reached an estimated $15.9 million.

The company’s valuation fell to an estimated $300 million, which was previously stated at a high of $1.1 billion in late 2019, following the discovery of exaggerated revenue and capitalization of the investors again.

Headspin’s ex-CEO is facing charges in complaints of wire fraud and securities fraud, each with one count. Lachwani can be sentenced to maximum 20-year imprisonment and can be fined $250, 000 if proven guilty of wire fraud.

Furthermore, a maximum 20-year imprisonment and $5,000,000 fine are his consequences if convicted of securities fraud, KRON4 reported.

Based on the complaint, Headpin, which was headed by Lachwani until May last year, gains revenue through selling subscriptions to its services.