U.S. District Court Judge Paul Gardephe of the U.S. District Court for the Southern District of New York accepted Cardak’s Jan. 12 guilty plea.
According to the allegations in the indictment and other statements made in court, from 2016 through at least 2019, Cardak, along with GigaTrust’s Chief Executive Officer Robert Bernardi GigaTrust’s Vice President of Business Development Sunil Chandra “devised a scheme to defraud investors and lenders by:
- Fabricating and disseminating false and misleading bank account statements that overstated GigaTrust’s cash deposits;
- Fabricating and disseminating false and misleading audit materials that purported to have been issued by GigaTrust’s auditors and overstated GigaTrust’s performance;
- Forging and disseminating a false and misleading letter purporting to be from GigaTrust’s New York-based counsel; and
- Impersonating or causing others to impersonate a purported customer and auditor of GigaTrust on telephone calls with a prospective lender.
The scheme worked like this: Bernardi sent fabricated audit materials to a New York-based investment firm and, along with Cardak, “used fabricated bank statements to obtain multiple rounds of loans and investments for GigaTrust worth millions of dollars,” the DoJ said.
After an unnamed New York-based bank that had loaned GigaTrust $25 million declared that GigaTrust had defaulted on the terms of its loan agreement, Bernardi and Cardak “induced additional investments in GigaTrust through, among other things, forging a letter purporting to be from GigaTrust’s New-York based counsel.”
Shortly thereafter, according to the DoJ, while negotiating another $25 million deal with another unnamed lender, Bernardi and Cardak “devised a scheme to impersonate a GigaTrust customer and auditor on requested diligence calls, which induced [the lender] to make a $25 million loan to GigaTrust.”
Bernardi allegedly recruited Chandra to pose as one of GigaTrust’s alleged customers on a call with the lender. Additionally, Bernardi and Cardak “fabricated bank statements and sent them to the lender right before closing the $25 million deal,” the DoJ added.
Cardak, Bernardi, and Chandra “chose to lie and mislead investors and lenders in order to keep GigaTrust afloat instead of owning up to the company’s financial reality,” said Damian Williams, U.S. Attorney for the Southern District of New York.
GigaTrust filed for Chapter 7 bankruptcy protection in the District of Delaware in November 2019.
Cardek pled guilty to conspiracy to commit securities fraud, which carries a maximum sentence of five years in prison. His sentencing is scheduled for May 16. On Aug. 17, 2022, Bernardi also pled guilty before Judge Gardephe to conspiracy to commit securities fraud, bank fraud, and wire fraud. 
Jaclyn Jaeger is a contributing editor at Compliance Chief 360° and a freelance business writer based in Manchester, New Hampshire.