Deepak Jain, CEO of a data services company the Wall Street Journal identified as AiNET, has been indicted by a DC grand jury for making false statements regarding the security of his data centers.

According to the DOJ’s press release, these misrepresentations were part of a scheme that saw a major client­­­ – the SEC – defrauded of $10.7m.

Data centers are classed into four categories, from least to most secure, reliable, and available. The highest certification of data center, Tier IV, is “is built to be completely fault tolerant and has redundancy for every component. It has an expected uptime of 99.995%,” according to HP.

The SEC required bidders to possess a Tier III data center or higher. The problem was, Jain apparently didn’t have one.

Instead, Jain allegedly created an entity that purported to be a data center auditor called Uptime Council, which falsely certified that his own data centers possessed Tier IV credentials. This landed him a contract with the agency that lasted from 2012 to 2018,

ITPro noted that that entity’s name closely resembles the well-known data center auditor Uptime Institute.

Security, cooling and power issues

Unsurprisingly, this misrepresentation created a major headache for the SEC. The agency claimed that throughout its contract with Jain’s company, it experienced significant issues with security, cooling and power that likely would not have occurred with a Tier IV data center.

Jain has strenuously denied the allegations.

“Deepak Jain and his company performed fully under the SEC contract. There is no evidence that any data was lost or compromised in any way. Mr. Jain is an innocent man who looks forward to confronting these charges at trial,” stated Steve McCool, his lawyer.

For his role in the alleged fraud, Jain has been charged with six counts of major fraud against the United States and one count of making false statements.  

A parallel investigation by the SEC’s Office of Inspector General, which investigates instances of agency waste, fraud and abuse and mismanagement, is ongoing.

“This indictment demonstrates our shared commitment with the Justice Department to hold bad actors accountable for engaging in schemes to defraud the SEC that undermine the integrity and fairness of the government procurement process,” said Inspector General Deborah Jeffrey of the SEC.  

A potential lesson learned: do not defraud the fraud watchdogs.