SEC v. Baba Nadimpalli, No. 3:24-cv-06683, Northern District of California (Sept. 24, 2024) — Complaint

COMPLAINT

SEC v. NADIMPALLI

1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
MONIQUE C. WINKLER (Cal. Bar No. 213031)
JASON H. LEE (Cal. Bar No. 253140)
JOHN K. HAN (Cal. Bar No. 208086)
  [email protected]
MATTHEW G. MEYERHOFER (Cal. Bar No. 268559)
  [email protected]

Attorneys for Plaintiff
SECURITIES AND EXCHANGE COMMISSION
44 Montgomery Street, Suite 700
San Francisco, CA 94104
(415) 705-2500 (Telephone)
(415) 705-2501 (Facsimile)
SECURITIES AND EXCHANGE COMMISSION,

                        Plaintiff,

            vs.

BABA NADIMPALLI,

  Defendant.

Case No.

COMPLAINT

Plaintiff Securities and Exchange Commission (the “SEC”) alleges:
SUMMARY OF THE ACTION
1. From at least January 2021 through February 2022, Baba Nadimpalli
(“Nadimpalli” or “Defendant”) engaged in a fraudulent scheme to raise more than $30 million
from investors by falsely inflating the commercial success of SKAEL, Inc., a software business
Nadimpalli co-founded in 2016 and ran as its CEO until July 2022. Nadimpalli lied to prospective
SKAEL investors by telling them that SKAEL ended 2020 with more than $2 million in “annual
recurring revenue” (“ARR”), an important metric for its current and future success, and that it
ended 2021 with $7 million in ARR. Nadimpalli also provided prospective investors with offering
UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF CALIFORNIA

COMPLAINT

SEC v. NADIMPALLI

1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
materials suggesting that SKAEL’s customers included public companies and well-known brands
at a time when none of those companies had a commercial relationship with SKAEL. To help
perpetuate this fraud, Nadimpalli provided a SKAEL finance employee and at least one investor
with fake bank statement information that purported to show millions of dollars in nonexistent
payments to SKAEL from customers.
2. Nadimpalli also misappropriated hundreds of thousands of dollars of investor
funds. He used at least $270,000 of money raised from SKAEL investors to pay for personal
expenses like mortgage payments, home renovations, and car payments.
3. In May 2022, Nadimpalli admitted to certain SKAEL investors that, contrary to
what he had told them previously, SKAEL did not have more than $7 million in ARR. SKAEL’s
Board of Directors convened a Special Committee to conduct an internal investigation into the
matter. Before the investigation concluded, Nadimpalli and the other members of SKAEL’s Board
of Directors voted to wind down the company. Nadimpalli subsequently left the United States.
4. As a result of the conduct alleged in this complaint, Defendant violated Section
10(b) of the Securities Exchange Act of 1934 (“Exchange Act”) [15 U.S.C. § 78j(b)] and Rule
10b-5 thereunder [17 C.F.R. § 240.10b-5], and Section 17(a) of the Securities Act of 1933
(“Securities Act”) [15 U.S.C. § 77q(a)].
5. In this action, the SEC seeks: permanent injunctions; disgorgement of ill-gotten
gains with prejudgment interest; and civil monetary penalties. The SEC also seeks an order
prohibiting Defendant from participating in the issuance, purchase, offer, or sale of any securities,
and imposing an officer and director bar against Defendant.
JURISDICTION AND VENUE
6. The SEC brings this action pursuant to Sections 20(b), 20(d), and 22(a) of the
Securities Act [15 U.S.C. §§ 77t(b), 77t(d), and 77v(a)], and Sections 21(d), 21(e), and 27 of the
Exchange Act [15 U.S.C. §§ 78u(d), 78u(e), and 78aa].
7. This Court has jurisdiction over this action pursuant to Sections 20(b), 20(d)(1),
and 22(a) of the Securities Act [15 U.S.C. §§ 77t(b), 77t(d)(1), and 77v(a)], and Sections 21(d),
21(e), and 27 of the Exchange Act [15 U.S.C. §§ 78u(d), 78u(e), and 78aa].

COMPLAINT

SEC v. NADIMPALLI

1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
8. Defendant, directly or indirectly, made use of the means and instrumentalities of
interstate commerce or of the mails in connection with the acts, transactions, practices, and courses
of business alleged in this complaint.
9. Venue is proper in this District pursuant to Section 22(a) of the Securities Act [15
U.S.C. § 77v(a)], and Section 27(a) of the Exchange Act [15 U.S.C. § 78aa(a)]. Acts, transactions,
practices, and courses of business that form the basis for the violations alleged in this complaint
occurred in this District. For example, SKAEL’s principal place of business at all relevant times
was in San Francisco, California.
10. Under Civil Local Rule 3-2(d), this civil action should be assigned to the San
Francisco Division because a substantial part of the events and omissions which give rise to the
claims alleged herein occurred in San Francisco County.
DEFENDANT
11. Baba Nadimpalli, age 41, is an Australian citizen and is believed to be residing
presently in Australia. He co-founded SKAEL and was its CEO until July 2022.
RELATED ENTITY
12. SKAEL, Inc. was, at all relevant times, a Delaware corporation with its principal
place of business in San Francisco, California. It was a private developer of business process
automation software from its founding in 2016 until it suspended operations in July 2022.
FACTUAL ALLEGATIONS
A. SKAEL Struggled to Build a Subscription-Based Business Process Automation
Platform.
13. Nadimpalli and two co-founders created SKAEL in 2016 with the goal of creating
subscription-based software modules, which the company called “digital employees,” to perform
routine business functions. Offloading routine tasks onto SKAEL’s digital employees, which were
supposed to operate via a simple chatbot interface, was intended to allow customers’ actual, human
employees to spend more time doing meaningful work and less time doing repetitive tasks.
14. SKAEL entered into agreements with some prospective customers to develop a
“proof of concept” for a digital employee. These proofs of concept were intended to show

COMPLAINT

SEC v. NADIMPALLI

1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
prospective subscribers how digital employees worked and how SKAEL’s software could be
adapted to subscribers’ business needs. Prospective subscribers typically paid SKAEL a one-time
fee to develop a proof of concept. But most companies that paid for a proof of concept did not
become stable, long-term subscribers.
B. In Early 2021, Nadimpalli Raised $1 Million From an Investor by Lying About
SKAEL’s Annual Recurring Revenue and Creating Fake Bank Statements.
15. On January 5, 2021, Nadimpalli sent a venture capital firm (“VC1”) an email
stating that SKAEL had ended 2020 with $2.1 million in ARR. ARR is the amount of revenue that
a business, at a point in time, expects to realize over the next 12 months on the basis of existing
subscriptions and contractual agreements. Nadimpalli also told VC1 that SKAEL had ended 2019
with $300,000 in ARR, which implied that SKAEL’s year-end 2020 ARR represented 600% in
year-over-year growth.
16. This statement about 2020 ARR was false. Nadimpalli knew, or was reckless in not
knowing, that SKAEL did not actually end 2020 with $2.1 million in ARR. In reality, SKAEL
never had any more than $170,000 in ARR at any point from 2020 to 2022.
17. VC1 considered ARR to be an important metric for evaluating potential
investments, and based on SKAEL’s purported growth, VC1 offered to make an investment in
SKAEL. In the course of negotiating the investment, VC1 asked Nadimpalli to provide bank
statements supporting Nadimpalli’s claims about SKAEL’s ARR. In order to support his
fraudulent claims about SKAEL’s ARR, on January 28 and February 1, 2021, Nadimpalli emailed
VC1 several months’ worth of doctored bank statements, which showed hundreds of thousands of
dollars in nonexistent payments, many of them purportedly made by companies that were not
SKAEL customers. Nadimpalli knew, or was reckless in not knowing, that the bank statements he
provided to VC1 were fake.
18. On February 2, 2021, after receiving the fake bank statements, VC1 paid SKAEL
$1 million for a Simple Agreement for Future Equity, or “SAFE.” A SAFE is a type of derivative
security that converts into preferred stock upon the occurrence of triggering events specified in the
SAFE.

COMPLAINT

SEC v. NADIMPALLI

1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
19. Nadimpalli was SKAEL’s primary contact with many potential and actual
customers. He also was the only person at SKAEL who had access to the bank account that
SKAEL used to receive payments from customers.
C. In Late 2021 and Early 2022, Nadimpalli Raised More Than $30 Million from
Investors by Continuing to Lie About SKAEL’s Annual Recurring Revenue and
Giving Investors Misleading Offering Materials.
20. From at least August 2021 through February 2022, Nadimpalli solicited
investments in SKAEL’s “Series A” private offering. Throughout this period, Nadimpalli
promoted SKAEL to prospective investors using written presentation materials, or “pitch decks,”
representing that SKAEL had ended 2020 with $2.3 million in ARR. An August 2021 version of
this pitch deck represented that SKAEL’s ARR at that time was $4.78 million, and later versions
represented that SKAEL’s ARR had increased to $7 million or more by the end of 2021. These
representations were all false. As Nadimpalli knew, or was reckless in not knowing, SKAEL never
had more than $170,000 in ARR at any point when it was selling securities in 2021 and 2022.
Nadimpalli worked on drafts of these pitch decks and was the person from SKAEL who presented
the decks at investor meetings.
21. The pitch decks also contained a slide that purported to show the company logos of
SKAEL’s customers. As Nadimpalli knew, or was reckless in not knowing, that slide was
misleading because it included the logos of several companies that were not SKAEL subscribers.
Some of these companies had paid SKAEL for a proof of concept but had not become SKAEL
subscribers, and others had never been SKAEL customers of any type at all.
22. Nadimpalli also directed a SKAEL finance employee to create profit-and-loss
statements to distribute to prospective SKAEL investors. Instead of providing the finance
employee with direct access to the bank account where SKAEL received customer payments,
Nadimpalli provided the finance employee with spreadsheets that Nadimpalli claimed showed
transactions in the bank account. As Nadimpalli knew or was reckless in not knowing, these
spreadsheets, like the doctored bank statements that Nadimpalli had provided to VC1, were fake
and included millions of dollars in nonexistent customer payments. The finance employee relied

COMPLAINT

SEC v. NADIMPALLI

1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
on these spreadsheets to create profit-and-loss statements, with the result that those statements
inflated SKAEL’s revenue and ARR by millions of dollars. SKAEL provided prospective
investors with these fraudulent profit-and-loss statements.
23. In late November or early December 2021, Nadimpalli presented the pitch deck
described above to another venture capital firm (“VC2”). Nadimpalli falsely represented to VC2
that SKAEL’s ARR at the end of 2021 was $7 million. Nadimpalli also gave VC2 a spreadsheet
that purported to show a customer-by-customer breakdown of SKAEL’s ARR as of November
2021. That spreadsheet falsely represented that SKAEL’s ARR in November 2021 was more than
$6 million; it also falsely ascribed more than $1 million in ARR to a particular SKAEL subscriber
who, in reality, had a subscription worth only $60,000 per year. Nadimpalli knew, or was reckless
in not knowing, that all of these representations about SKAEL’s ARR were false. VC2 considered
ARR to be an important metric for evaluating potential investments. On February 7, 2022, VC2
paid SKAEL more than $15.7 million for SKAEL preferred stock.
24. In November 2021, Nadimpalli presented the August 2021 version of the pitch
deck described above to a third venture capital firm (“VC3”). At that time, Nadimpalli also
verbally claimed to VC3 that SKAEL’s ARR was $6 million. In December 2021 or January 2022,
Nadimpalli presented another version of the pitch deck to VC3, this one representing that
SKAEL’s ARR had grown to $7.2 million. Nadimpalli knew or was reckless in not knowing that
these ARR numbers were false. VC3 considered ARR to be an important metric for evaluating
potential investments. On December 16, 2021, VC3 paid SKAEL $1 million for a SAFE. On
February 1, 2022, VC3 paid SKAEL an additional $7 million for SKAEL preferred stock.
25. On a December 14, 2021 telephone call, Nadimpalli told VC1 that SKAEL was
finishing 2021 with more than $7 million in ARR. Nadimpalli knew or was reckless in not
knowing that this was false. On February 1, 2022, VC1 paid SKAEL more than $2.2 million for
SKAEL preferred stock.
26. In total, eight investors collectively paid SKAEL almost $30 million for preferred
stock during SKAEL’s Series A private offering (not including VC1 and VC3’s $1 million SAFE
investments). Among other things, investor money was used to pay Nadimpalli’s salary at SKAEL.

COMPLAINT

SEC v. NADIMPALLI

1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
D. Nadimpalli Misappropriated SKAEL Funds For Personal Expenses.
27. Before and after these investments, Nadimpalli had a practice of using one of
SKAEL’s bank accounts to pay for personal expenses. These payments amounted to hundreds of
thousands of dollars and included mortgage payments on Nadimpalli’s personal residence, home
renovation payments, car payments, and payments on Nadimpalli’s personal credit card. For
example, from January 2018 through July 2022, Nadimpalli made a payment on his home
mortgage about once a month from SKAEL’s bank account, usually in the amount of $4,700.
Nadimpalli did not tell investors that he used SKAEL’s money to pay for personal expenses.
E. SKAEL Collapsed When the Company’s Board of Directors Investigated its ARR
Numbers.
28. On a May 20, 2022 call, Nadimpalli told representatives of VC3 that the $7 million
ARR number he had shared during the Series A offering process was wrong, but misleadingly
blamed the inaccuracy on SKAEL’s sales personnel. SKAEL’s Board of Directors formed a
Special Committee to investigate the matter. While that investigation was ongoing, SKAEL’s
Board of Directors, including Nadimpalli himself, voted to wind down the company. Nadimpalli
subsequently left the United States.
FIRST CLAIM FOR RELIEF
Violations of Section 10(b) of the Exchange Act and Rule 10b-5 Thereunder
29. The SEC re-alleges and incorporates by reference Paragraph Nos. 1 through 28.
30. Defendant, by engaging in the conduct described above, directly or indirectly, in
connection with the purchase or sale of securities, by use of means or instrumentalities of interstate
commerce, or of the mails, with scienter:
a. Employed devices, schemes, or artifices to defraud;
b. Made untrue statements of material facts or omitted to state material facts
necessary in order to make the statements made, in the light of the
circumstances under which they were made, not misleading; and

COMPLAINT

SEC v. NADIMPALLI

1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
c. Engaged in acts, practices, or courses of business which operated or would
operate as a fraud or deceit upon other persons, including purchasers of
securities.
31. By reason of the foregoing, Defendant violated, and unless restrained and enjoined
will continue to violate, Section 10(b) of the Exchange Act [15 U.S.C. § 78j(b)] and Rule 10b-5
thereunder [17 C.F.R. § 240.10b-5].
SECOND CLAIM FOR RELIEF
Violations of Section 17(a) of the Securities Act
32. The SEC re-alleges and incorporates by reference Paragraph Nos. 1 through 28.
33. Defendant, by engaging in the conduct described above, directly or indirectly, in
the offer or sale of securities, by use of the means or instruments of transportation or
communication in interstate commerce or by use of the mails:
a. with scienter, employed devices, schemes, or artifices to defraud;
b. obtained money or property by means of untrue statements of material fact
or by omitting to state a material fact necessary in order to make the
statements made, in light of the circumstances under which they were
made, not misleading; and
c. engaged in transactions, practices, or courses of business which operated or
would operate as a fraud or deceit upon purchasers.
34. By reason of the foregoing, Defendant violated, and unless restrained and enjoined
will continue to violate, Section 17(a) of the Securities Act [15 U.S.C. § 77q(a)].
PRAYER FOR RELIEF
WHEREFORE, the SEC respectfully requests that the Court:
I.
Permanently enjoin Defendant from directly or indirectly violating Section 10(b) of the
Exchange Act [15 U.S.C. § 78j(b)] and Rule 10b-5 [17 C.F.R. § 240.10b-5] thereunder, and
Section 17(a) of the Securities Act [15 U.S.C. § 77q(a)].

COMPLAINT

SEC v. NADIMPALLI

1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
II.
Permanently enjoin Defendant from directly or indirectly, including, but not limited to,
through any entity owned or controlled by him, participating in the issuance, purchase, offer, or
sale of any securities, provided however, that such injunction shall not prevent Defendant from
purchasing or selling securities for his own personal accounts.
III.
Enter an order prohibiting Defendant from serving as an officer or director of any issuer
having a class of securities registered with the SEC pursuant to Section 12 of the Exchange Act [15
U.S.C. § 78l] or that is required to file reports pursuant to Section 15(d) of the Exchange Act [15
U.S.C. § 78o(d)], pursuant to Section 20(e) of the Securities Act [15 U.S.C. § 77t(e)] and Section
21(d)(2) of the Exchange Act [15 U.S.C. § 78u(d)(2)].
IV.
Issue an order requiring Defendant to disgorge all ill-gotten gains received as a result of his
unlawful conduct plus prejudgment interest thereon pursuant to Sections 21(d)(3), 21(d)(5), and
21(d)(7) of the Exchange Act [15 U.S.C. §§ 78u(d)(3), 78u(d)(5), and 78u(d)(7)].
V.
Issue an order requiring Defendant to pay civil monetary penalties pursuant to Section
20(d) of the Securities Act [15 U.S.C. § 77t(d)], and Section 21(d) of the Exchange Act [15 U.S.C.
§ 78u(d)].
VI.
Retain jurisdiction over this action in accordance with the principles of equity and the
Federal Rules of Civil Procedure in order to implement and carry out the terms of all orders and
decrees that may be entered, or to entertain any suitable application or motion for additional relief
within the jurisdiction of this Court.

COMPLAINT

SEC v. NADIMPALLI

1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
VII.
Grant such other and further relief as this Court may determine to be just, equitable, and
necessary.

Dated:  September 24, 2024                         Respectfully            submitted,

  /s/ Matthew Meyerhofer
Matthew Meyerhofer
Attorney for Plaintiff
SECURITIES AND EXCHANGE COMMISSION

COMPLAINT  
  SEC v. NADIMPALLI 

 

1 

2 

3 

4 

5 

6 

7 

8 

9 

10 

11 

12 

13 

14 

15 

16 

17 

18 

19 

20 

21 

22 

23 

24 

25 

26 

27 

28 

MONIQUE C. WINKLER (Cal. Bar No. 213031) 
JASON H. LEE (Cal. Bar No. 253140) 
JOHN K. HAN (Cal. Bar No. 208086) 
  [email protected] 
MATTHEW G. MEYERHOFER (Cal. Bar No. 268559) 
  [email protected] 
 
Attorneys for Plaintiff 
SECURITIES AND EXCHANGE COMMISSION 
44 Montgomery Street, Suite 700 
San Francisco, CA 94104  
(415) 705-2500 (Telephone) 
(415) 705-2501 (Facsimile) 

SECURITIES AND EXCHANGE COMMISSION, 
 
  Plaintiff, 
 
 vs. 
 
BABA NADIMPALLI, 
 

  Defendant. 
 

Case No.  
 
 
COMPLAINT 
 

Plaintiff Securities and Exchange Commission (the “SEC”) alleges: 

SUMMARY OF THE ACTION 

1. From at least January 2021 through February 2022, Baba Nadimpalli 

(“Nadimpalli” or “Defendant”) engaged in a fraudulent scheme to raise more than $30 million 

from investors by falsely inflating the commercial success of SKAEL, Inc., a software business 

Nadimpalli co-founded in 2016 and ran as its CEO until July 2022. Nadimpalli lied to prospective 

SKAEL investors by telling them that SKAEL ended 2020 with more than $2 million in “annual 

recurring revenue” (“ARR”), an important metric for its current and future success, and that it 

ended 2021 with $7 million in ARR. Nadimpalli also provided prospective investors with offering 

UNITED STATES DISTRICT COURT 

NORTHERN DISTRICT OF CALIFORNIA 

 

Case 3:24-cv-06683   Document 1   Filed 09/24/24   Page 1 of 10



  

COMPLAINT 
 -2- SEC v. NADIMPALLI 

 

1 

2 

3 

4 

5 

6 

7 

8 

9 

10 

11 

12 

13 

14 

15 

16 

17 

18 

19 

20 

21 

22 

23 

24 

25 

26 

27 

28 

materials suggesting that SKAEL’s customers included public companies and well-known brands 

at a time when none of those companies had a commercial relationship with SKAEL. To help 

perpetuate this fraud, Nadimpalli provided a SKAEL finance employee and at least one investor 

with fake bank statement information that purported to show millions of dollars in nonexistent 

payments to SKAEL from customers. 

2. Nadimpalli also misappropriated hundreds of thousands of dollars of investor 

funds. He used at least $270,000 of money raised from SKAEL investors to pay for personal 

expenses like mortgage payments, home renovations, and car payments. 

3. In May 2022, Nadimpalli admitted to certain SKAEL investors that, contrary to 

what he had told them previously, SKAEL did not have more than $7 million in ARR. SKAEL’s 

Board of Directors convened a Special Committee to conduct an internal investigation into the 

matter. Before the investigation concluded, Nadimpalli and the other members of SKAEL’s Board 

of Directors voted to wind down the company. Nadimpalli subsequently left the United States. 

4. As a result of the conduct alleged in this complaint, Defendant violated Section 

10(b) of the Securities Exchange Act of 1934 (“Exchange Act”) [15 U.S.C. § 78j(b)] and Rule 

10b-5 thereunder [17 C.F.R. § 240.10b-5], and Section 17(a) of the Securities Act of 1933 

(“Securities Act”) [15 U.S.C. § 77q(a)]. 

5. In this action, the SEC seeks: permanent injunctions; disgorgement of ill-gotten 

gains with prejudgment interest; and civil monetary penalties. The SEC also seeks an order 

prohibiting Defendant from participating in the issuance, purchase, offer, or sale of any securities, 

and imposing an officer and director bar against Defendant. 

JURISDICTION AND VENUE 

6. The SEC brings this action pursuant to Sections 20(b), 20(d), and 22(a) of the 

Securities Act [15 U.S.C. §§ 77t(b), 77t(d), and 77v(a)], and Sections 21(d), 21(e), and 27 of the 

Exchange Act [15 U.S.C. §§ 78u(d), 78u(e), and 78aa]. 

7. This Court has jurisdiction over this action pursuant to Sections 20(b), 20(d)(1), 

and 22(a) of the Securities Act [15 U.S.C. §§ 77t(b), 77t(d)(1), and 77v(a)], and Sections 21(d), 

21(e), and 27 of the Exchange Act [15 U.S.C. §§ 78u(d), 78u(e), and 78aa].  

Case 3:24-cv-06683   Document 1   Filed 09/24/24   Page 2 of 10



  

COMPLAINT 
 -3- SEC v. NADIMPALLI 

 

1 

2 

3 

4 

5 

6 

7 

8 

9 

10 

11 

12 

13 

14 

15 

16 

17 

18 

19 

20 

21 

22 

23 

24 

25 

26 

27 

28 

8. Defendant, directly or indirectly, made use of the means and instrumentalities of 

interstate commerce or of the mails in connection with the acts, transactions, practices, and courses 

of business alleged in this complaint. 

9. Venue is proper in this District pursuant to Section 22(a) of the Securities Act [15 

U.S.C. § 77v(a)], and Section 27(a) of the Exchange Act [15 U.S.C. § 78aa(a)]. Acts, transactions, 

practices, and courses of business that form the basis for the violations alleged in this complaint 

occurred in this District. For example, SKAEL’s principal place of business at all relevant times 

was in San Francisco, California. 

10. Under Civil Local Rule 3-2(d), this civil action should be assigned to the San 

Francisco Division because a substantial part of the events and omissions which give rise to the 

claims alleged herein occurred in San Francisco County. 

DEFENDANT 

11. Baba Nadimpalli, age 41, is an Australian citizen and is believed to be residing 

presently in Australia. He co-founded SKAEL and was its CEO until July 2022. 

RELATED ENTITY 

12. SKAEL, Inc. was, at all relevant times, a Delaware corporation with its principal 

place of business in San Francisco, California. It was a private developer of business process 

automation software from its founding in 2016 until it suspended operations in July 2022. 

FACTUAL ALLEGATIONS 

A. SKAEL Struggled to Build a Subscription-Based Business Process Automation 
Platform. 

13. Nadimpalli and two co-founders created SKAEL in 2016 with the goal of creating 

subscription-based software modules, which the company called “digital employees,” to perform 

routine business functions. Offloading routine tasks onto SKAEL’s digital employees, which were 

supposed to operate via a simple chatbot interface, was intended to allow customers’ actual, human 

employees to spend more time doing meaningful work and less time doing repetitive tasks. 

14. SKAEL entered into agreements with some prospective customers to develop a 

“proof of concept” for a digital employee. These proofs of concept were intended to show 

Case 3:24-cv-06683   Document 1   Filed 09/24/24   Page 3 of 10



  

COMPLAINT 
 -4- SEC v. NADIMPALLI 

 

1 

2 

3 

4 

5 

6 

7 

8 

9 

10 

11 

12 

13 

14 

15 

16 

17 

18 

19 

20 

21 

22 

23 

24 

25 

26 

27 

28 

prospective subscribers how digital employees worked and how SKAEL’s software could be 

adapted to subscribers’ business needs. Prospective subscribers typically paid SKAEL a one-time 

fee to develop a proof of concept. But most companies that paid for a proof of concept did not 

become stable, long-term subscribers. 

B. In Early 2021, Nadimpalli Raised $1 Million From an Investor by Lying About 
SKAEL’s Annual Recurring Revenue and Creating Fake Bank Statements. 

15. On January 5, 2021, Nadimpalli sent a venture capital firm (“VC1”) an email 

stating that SKAEL had ended 2020 with $2.1 million in ARR. ARR is the amount of revenue that 

a business, at a point in time, expects to realize over the next 12 months on the basis of existing 

subscriptions and contractual agreements. Nadimpalli also told VC1 that SKAEL had ended 2019 

with $300,000 in ARR, which implied that SKAEL’s year-end 2020 ARR represented 600% in 

year-over-year growth.  

16. This statement about 2020 ARR was false. Nadimpalli knew, or was reckless in not 

knowing, that SKAEL did not actually end 2020 with $2.1 million in ARR. In reality, SKAEL 

never had any more than $170,000 in ARR at any point from 2020 to 2022. 

17. VC1 considered ARR to be an important metric for evaluating potential 

investments, and based on SKAEL’s purported growth, VC1 offered to make an investment in 

SKAEL. In the course of negotiating the investment, VC1 asked Nadimpalli to provide bank 

statements supporting Nadimpalli’s claims about SKAEL’s ARR. In order to support his 

fraudulent claims about SKAEL’s ARR, on January 28 and February 1, 2021, Nadimpalli emailed 

VC1 several months’ worth of doctored bank statements, which showed hundreds of thousands of 

dollars in nonexistent payments, many of them purportedly made by companies that were not 

SKAEL customers. Nadimpalli knew, or was reckless in not knowing, that the bank statements he 

provided to VC1 were fake. 

18. On February 2, 2021, after receiving the fake bank statements, VC1 paid SKAEL 

$1 million for a Simple Agreement for Future Equity, or “SAFE.” A SAFE is a type of derivative 

security that converts into preferred stock upon the occurrence of triggering events specified in the 

SAFE. 

Case 3:24-cv-06683   Document 1   Filed 09/24/24   Page 4 of 10



  

COMPLAINT 
 -5- SEC v. NADIMPALLI 

 

1 

2 

3 

4 

5 

6 

7 

8 

9 

10 

11 

12 

13 

14 

15 

16 

17 

18 

19 

20 

21 

22 

23 

24 

25 

26 

27 

28 

19. Nadimpalli was SKAEL’s primary contact with many potential and actual 

customers. He also was the only person at SKAEL who had access to the bank account that 

SKAEL used to receive payments from customers. 

C. In Late 2021 and Early 2022, Nadimpalli Raised More Than $30 Million from 
Investors by Continuing to Lie About SKAEL’s Annual Recurring Revenue and 
Giving Investors Misleading Offering Materials. 

20. From at least August 2021 through February 2022, Nadimpalli solicited 

investments in SKAEL’s “Series A” private offering. Throughout this period, Nadimpalli 

promoted SKAEL to prospective investors using written presentation materials, or “pitch decks,” 

representing that SKAEL had ended 2020 with $2.3 million in ARR. An August 2021 version of 

this pitch deck represented that SKAEL’s ARR at that time was $4.78 million, and later versions 

represented that SKAEL’s ARR had increased to $7 million or more by the end of 2021. These 

representations were all false. As Nadimpalli knew, or was reckless in not knowing, SKAEL never 

had more than $170,000 in ARR at any point when it was selling securities in 2021 and 2022. 

Nadimpalli worked on drafts of these pitch decks and was the person from SKAEL who presented 

the decks at investor meetings. 

21. The pitch decks also contained a slide that purported to show the company logos of 

SKAEL’s customers. As Nadimpalli knew, or was reckless in not knowing, that slide was 

misleading because it included the logos of several companies that were not SKAEL subscribers. 

Some of these companies had paid SKAEL for a proof of concept but had not become SKAEL 

subscribers, and others had never been SKAEL customers of any type at all. 

22. Nadimpalli also directed a SKAEL finance employee to create profit-and-loss 

statements to distribute to prospective SKAEL investors. Instead of providing the finance 

employee with direct access to the bank account where SKAEL received customer payments, 

Nadimpalli provided the finance employee with spreadsheets that Nadimpalli claimed showed 

transactions in the bank account. As Nadimpalli knew or was reckless in not knowing, these 

spreadsheets, like the doctored bank statements that Nadimpalli had provided to VC1, were fake 

and included millions of dollars in nonexistent customer payments. The finance employee relied 

Case 3:24-cv-06683   Document 1   Filed 09/24/24   Page 5 of 10



  

COMPLAINT 
 -6- SEC v. NADIMPALLI 

 

1 

2 

3 

4 

5 

6 

7 

8 

9 

10 

11 

12 

13 

14 

15 

16 

17 

18 

19 

20 

21 

22 

23 

24 

25 

26 

27 

28 

on these spreadsheets to create profit-and-loss statements, with the result that those statements 

inflated SKAEL’s revenue and ARR by millions of dollars. SKAEL provided prospective 

investors with these fraudulent profit-and-loss statements. 

23. In late November or early December 2021, Nadimpalli presented the pitch deck 

described above to another venture capital firm (“VC2”). Nadimpalli falsely represented to VC2 

that SKAEL’s ARR at the end of 2021 was $7 million. Nadimpalli also gave VC2 a spreadsheet 

that purported to show a customer-by-customer breakdown of SKAEL’s ARR as of November 

2021. That spreadsheet falsely represented that SKAEL’s ARR in November 2021 was more than 

$6 million; it also falsely ascribed more than $1 million in ARR to a particular SKAEL subscriber 

who, in reality, had a subscription worth only $60,000 per year. Nadimpalli knew, or was reckless 

in not knowing, that all of these representations about SKAEL’s ARR were false. VC2 considered 

ARR to be an important metric for evaluating potential investments. On February 7, 2022, VC2 

paid SKAEL more than $15.7 million for SKAEL preferred stock. 

24. In November 2021, Nadimpalli presented the August 2021 version of the pitch 

deck described above to a third venture capital firm (“VC3”). At that time, Nadimpalli also 

verbally claimed to VC3 that SKAEL’s ARR was $6 million. In December 2021 or January 2022, 

Nadimpalli presented another version of the pitch deck to VC3, this one representing that 

SKAEL’s ARR had grown to $7.2 million. Nadimpalli knew or was reckless in not knowing that 

these ARR numbers were false. VC3 considered ARR to be an important metric for evaluating 

potential investments. On December 16, 2021, VC3 paid SKAEL $1 million for a SAFE. On 

February 1, 2022, VC3 paid SKAEL an additional $7 million for SKAEL preferred stock. 

25. On a December 14, 2021 telephone call, Nadimpalli told VC1 that SKAEL was 

finishing 2021 with more than $7 million in ARR. Nadimpalli knew or was reckless in not 

knowing that this was false. On February 1, 2022, VC1 paid SKAEL more than $2.2 million for 

SKAEL preferred stock. 

26. In total, eight investors collectively paid SKAEL almost $30 million for preferred 

stock during SKAEL’s Series A private offering (not including VC1 and VC3’s $1 million SAFE 

investments). Among other things, investor money was used to pay Nadimpalli’s salary at SKAEL. 

Case 3:24-cv-06683   Document 1   Filed 09/24/24   Page 6 of 10



  

COMPLAINT 
 -7- SEC v. NADIMPALLI 

 

1 

2 

3 

4 

5 

6 

7 

8 

9 

10 

11 

12 

13 

14 

15 

16 

17 

18 

19 

20 

21 

22 

23 

24 

25 

26 

27 

28 

D. Nadimpalli Misappropriated SKAEL Funds For Personal Expenses. 

27. Before and after these investments, Nadimpalli had a practice of using one of 

SKAEL’s bank accounts to pay for personal expenses. These payments amounted to hundreds of 

thousands of dollars and included mortgage payments on Nadimpalli’s personal residence, home 

renovation payments, car payments, and payments on Nadimpalli’s personal credit card. For 

example, from January 2018 through July 2022, Nadimpalli made a payment on his home 

mortgage about once a month from SKAEL’s bank account, usually in the amount of $4,700. 

Nadimpalli did not tell investors that he used SKAEL’s money to pay for personal expenses. 

E. SKAEL Collapsed When the Company’s Board of Directors Investigated its ARR 
Numbers.  

28. On a May 20, 2022 call, Nadimpalli told representatives of VC3 that the $7 million 

ARR number he had shared during the Series A offering process was wrong, but misleadingly 

blamed the inaccuracy on SKAEL’s sales personnel. SKAEL’s Board of Directors formed a 

Special Committee to investigate the matter. While that investigation was ongoing, SKAEL’s 

Board of Directors, including Nadimpalli himself, voted to wind down the company. Nadimpalli 

subsequently left the United States. 

FIRST CLAIM FOR RELIEF 

Violations of Section 10(b) of the Exchange Act and Rule 10b-5 Thereunder 

29. The SEC re-alleges and incorporates by reference Paragraph Nos. 1 through 28. 

30. Defendant, by engaging in the conduct described above, directly or indirectly, in 

connection with the purchase or sale of securities, by use of means or instrumentalities of interstate 

commerce, or of the mails, with scienter: 

a. Employed devices, schemes, or artifices to defraud; 

b. Made untrue statements of material facts or omitted to state material facts 

necessary in order to make the statements made, in the light of the 

circumstances under which they were made, not misleading; and 

Case 3:24-cv-06683   Document 1   Filed 09/24/24   Page 7 of 10



  

COMPLAINT 
 -8- SEC v. NADIMPALLI 

 

1 

2 

3 

4 

5 

6 

7 

8 

9 

10 

11 

12 

13 

14 

15 

16 

17 

18 

19 

20 

21 

22 

23 

24 

25 

26 

27 

28 

c. Engaged in acts, practices, or courses of business which operated or would 

operate as a fraud or deceit upon other persons, including purchasers of 

securities. 

31. By reason of the foregoing, Defendant violated, and unless restrained and enjoined 

will continue to violate, Section 10(b) of the Exchange Act [15 U.S.C. § 78j(b)] and Rule 10b-5 

thereunder [17 C.F.R. § 240.10b-5]. 

SECOND CLAIM FOR RELIEF 

Violations of Section 17(a) of the Securities Act 

32. The SEC re-alleges and incorporates by reference Paragraph Nos. 1 through 28. 

33. Defendant, by engaging in the conduct described above, directly or indirectly, in 

the offer or sale of securities, by use of the means or instruments of transportation or 

communication in interstate commerce or by use of the mails:  

a. with scienter, employed devices, schemes, or artifices to defraud;  

b. obtained money or property by means of untrue statements of material fact 

or by omitting to state a material fact necessary in order to make the 

statements made, in light of the circumstances under which they were 

made, not misleading; and  

c. engaged in transactions, practices, or courses of business which operated or 

would operate as a fraud or deceit upon purchasers.  

34. By reason of the foregoing, Defendant violated, and unless restrained and enjoined 

will continue to violate, Section 17(a) of the Securities Act [15 U.S.C. § 77q(a)]. 

PRAYER FOR RELIEF 

WHEREFORE, the SEC respectfully requests that the Court: 

I. 

Permanently enjoin Defendant from directly or indirectly violating Section 10(b) of the 

Exchange Act [15 U.S.C. § 78j(b)] and Rule 10b-5 [17 C.F.R. § 240.10b-5] thereunder, and 

Section 17(a) of the Securities Act [15 U.S.C. § 77q(a)]. 

Case 3:24-cv-06683   Document 1   Filed 09/24/24   Page 8 of 10



  

COMPLAINT 
 -9- SEC v. NADIMPALLI 

 

1 

2 

3 

4 

5 

6 

7 

8 

9 

10 

11 

12 

13 

14 

15 

16 

17 

18 

19 

20 

21 

22 

23 

24 

25 

26 

27 

28 

II. 

Permanently enjoin Defendant from directly or indirectly, including, but not limited to, 

through any entity owned or controlled by him, participating in the issuance, purchase, offer, or 

sale of any securities, provided however, that such injunction shall not prevent Defendant from 

purchasing or selling securities for his own personal accounts. 

III. 

Enter an order prohibiting Defendant from serving as an officer or director of any issuer 

having a class of securities registered with the SEC pursuant to Section 12 of the Exchange Act [15 

U.S.C. § 78l] or that is required to file reports pursuant to Section 15(d) of the Exchange Act [15 

U.S.C. § 78o(d)], pursuant to Section 20(e) of the Securities Act [15 U.S.C. § 77t(e)] and Section 

21(d)(2) of the Exchange Act [15 U.S.C. § 78u(d)(2)]. 

IV. 

Issue an order requiring Defendant to disgorge all ill-gotten gains received as a result of his 

unlawful conduct plus prejudgment interest thereon pursuant to Sections 21(d)(3), 21(d)(5), and 

21(d)(7) of the Exchange Act [15 U.S.C. §§ 78u(d)(3), 78u(d)(5), and 78u(d)(7)]. 

V. 

Issue an order requiring Defendant to pay civil monetary penalties pursuant to Section 

20(d) of the Securities Act [15 U.S.C. § 77t(d)], and Section 21(d) of the Exchange Act [15 U.S.C. 

§ 78u(d)]. 

VI. 

Retain jurisdiction over this action in accordance with the principles of equity and the 

Federal Rules of Civil Procedure in order to implement and carry out the terms of all orders and 

decrees that may be entered, or to entertain any suitable application or motion for additional relief 

within the jurisdiction of this Court. 
  

Case 3:24-cv-06683   Document 1   Filed 09/24/24   Page 9 of 10



  

COMPLAINT 
 -10- SEC v. NADIMPALLI 

 

1 

2 

3 

4 

5 

6 

7 

8 

9 

10 

11 

12 

13 

14 

15 

16 

17 

18 

19 

20 

21 

22 

23 

24 

25 

26 

27 

28 

VII. 

Grant such other and further relief as this Court may determine to be just, equitable, and 

necessary. 

 
 
Dated:  September 24, 2024   Respectfully submitted, 
 

  /s/ Matthew Meyerhofer                           
Matthew Meyerhofer 
Attorney for Plaintiff 
SECURITIES AND EXCHANGE COMMISSION 

 

Case 3:24-cv-06683   Document 1   Filed 09/24/24   Page 10 of 10


	Plaintiff1: SECURITIES AND EXCHANGE COMMISSION
	County_of_Residence_P11: 
	Plaintiff's Attorney(s)1: Matthew Meyerhofer       John K Han,      Securities and Exchange Commission, 
44 Montgomery Street, Suite 700, San Francisco, CA 94104 (415) 705-2500   
	Defendant1: BABA NADIMPALLI
	County_of_Residence_of_D11: 
	Defendant's Attorney(s) (If Known)1: 
	Basis of Jurisdiction1: COSName{1.U.S. Plaintiff}
	Basis of Jurisdiction.21: 1.U.S. Plaintiff
	Basis of Jurisdiction.11: 1.U.S. Plaintiff
	Basis of Jurisdiction.31: 1.U.S. Plaintiff
	Basis of Jurisdiction.41: 1.U.S. Plaintiff

	71: Off
	81: Off
	91: Off
	101: Off
	111: Off
	121: Off
	131: Off
	141: Off
	151: Off
	161: Off
	171: Off
	181: Off
	Nature of Suit1: 850