What happened: Chief technology officer at Vancouver-based BuildDirect charged with white-collar crimes in U.S.
Why it matters: Allegations related to COVID-19 economic relief from American government
American prosecutors have charged a top executive at one of Vancouver’s most prominent tech companies with money laundering and wire fraud.
Mukund Mohan, chief technology officer of BuildDirect.com Technologies Inc., was taken into custody Thursday (July 23) in Washington state after being accused of fraudulently seeking more than $US5.5 million in loans from the U.S. Paycheck Protection Program (PPP) and then laundering the proceeds.
The 48-year-old American, who lives in suburban Seattle, is alleged to have submitted at least eight fraudulent PPP loan applications on behalf of six different companies between April and June 2020.
U.S. government-backed economic relief worth US$521 billion — made available in March upon the outset of the COVID-19 pandemic — is accessible through the PPP to assist small businesses with job retention through forgivable loans.
None of the accusations from U.S. prosecutors relate to activities involving BuildDirect, best known as an ecommerce company specializing in home-building supplies.
Mohan is alleged to have used one company he purchased in May 2020, Mahenjo Inc., to make a fraudulent loan application seeking US$431,250, according to court documents.
Authorities say the executive falsely claimed to a financial institution that Mahenjo had dozens of employees responsible for US$2.3 million in payroll expenses as of 2019.
Mohan is alleged to have submitted faked and altered documents, including fake federal tax filings and altered incorporation documents, in the loan application.
Prosecutors also accuse him of transferring at least US$231,000 in fraudulently-obtained loan proceeds to his personal brokerage account.
Among seven loan applications ranging from US$150,000 to US$1.8 million, American authorities say there is no record of any of the companies Mohan submitted on behalf of having paid employee wages or payroll taxes.
Prior to BuildDirect, Mohan cut his teeth in the tech sector working at companies such as Microsoft Corp. (Nasdaq:MSFT), Hewlett Packard Enterprise Co. (NYSE:HPE) and Amazon.com Inc. (Nasdaq:AMZN).
According to his profile listed on BuildDirect’s website as of July 26, “Mukund [Mohan] is also a successful serial entrepreneur, founding three companies and selling two, creating over 4.7X returns for investors over five years. Most notably he was the founder of BuzzGain, a social media monitoring SaaS product, acquired by Meltwater Inc. in 2011.”
In Mohan’s LinkedIn profile, he describes his position as running sales and technology for BuildDirect.
Often billed as the Amazon of home-building supplies, BuildDirect filed for creditor protection in October 2017.
Mohan joined the company in 2018, the same year he departed Amazon, according to his LinkedIn profile.
B.C. court documents from 2017 revealed BuildDirect owed lenders $75 million in principal at the same time operating costs were exceeding revenue by $2.6 million a month.
BuildDirect eventually raised US$28 million and converted US$15 million of interim financing provided during the Companies’ Creditors Arrangement Act proceedings.
And as part of the plan, creditors agreed to convert US$58 million of debt into equity.
CEO Dan Park, who left Amazon to join BuildDirect as chief operating officer, took over from founder Jeff Booth in the fall of 2017, steering the company out of creditor protection by March 2019.
“We’re in the best financial position that we’ve been in, in BuildDirect’s 19-year history,” Park told BIV in 2018.
Mohan did not respond to an interview request from BIV prior to publication.
None of the allegations against Mohan have been proven in court.
BuildDirect did not acknowledge interview requests from BIV made on July 26 and July 27.
Instead, in a statement sent on July 27 the company said Mohan has been placed on leave while it reviews the matter.