SEC Sues CEO for $10.7 Million Data Center Fraud

Charges have been brought in the United States against Deepak Jain, the head of an IT company, accusing him of fraud and providing false information to secure a contract with the SEC. According to the investigation, Jain and his company deceived the SEC by presenting their data center in Beltsville as a facility with the highest level of reliability.

To secure the contract, the company had to demonstrate that its data center met the “Tier 4” standard — a designation given to the most reliable and secure data centers, offering 99.995% uptime. However, the certificate presented to the SEC was counterfeit. Moreover, the organization supposedly issuing the document, Uptime Council, did not exist. The investigation believes Jain himself created this fictitious entity to win the contract and profit from it.

The Department of Justice statement emphasized that Jain and his company benefitted at the expense of the SEC’s data security. Issues with the data center emerged during the contract’s tenure, with failures in security systems, cooling, and power supply — all of which were supposed to meet the standards referenced in the fraudulent documents.

The SEC attempted to inspect the data center, but company employees obstructed access to key infrastructure areas where violations could have been present. The contract was nevertheless signed in 2012 and continued until 2018. Over this period, the SEC spent $10.7 million, but at the end of the contract, it refused to extend the agreement.

Jain, now 49, faces up to 10 years in prison for each count of fraud and up to 5 years for providing false testimony. While the company’s name is not mentioned in official documents, sources link Jain to AiNET — a company operating in Beltsville, USA, which claims on its website to manage Tier 4 certified data centers. Journalists attempted to contact AiNET, but were only told that Jain was “unavailable” and asked not to call again.

Jain’s attorneys maintain that their client is innocent. They stressed that the SEC did not lose a single byte of data and all contractual obligations were fulfilled. Jain intends to prove his innocence in court.