Ram Reddy Master Criminal or Horrible Businessman?
Ram Reddy, who is this guy? When I published the post, The Startup DCTech Crime Family, I was surprised by the pushback on naming Ram Reddy the Godfather. Reddy has spent a long time creating the image of a legitimate businessman. Since that post, additional information, a civil lawsuit bolsters my suspicions. Ram Reddy categorically denies the allegations.
The suit (see link Clique – Donahue v. Communiclique – Complaint) seeks actual and punitive damages and alleges constructive fraud in the inducement in the purchase and acquisition of stock in CommuniClique (dba CliqueAPI), alleging Ram Reddy and Andy Powers defrauded the plaintiff. For some inexplicable reason, the suit fails to name the company’s former CFO, Tim Lee.
The suit alleges that since 2006, Communiclique (DBA CliqueAPI) raised $23 million in equity through the offer and sale of stock shares to about 90 investors. The plaintiff alleges that Andy Powers, the CEO of the criminal enterprise CliqueAPI, posited that the company would end 2016 with revenue between $120 to $125 million. Powers claimed key customer wins included Uber, FedEx, Wilmer Hale, and Airbnb. Powers and by implication, Chairman of the Board member Ram Reddy and CFO Tim Lee reported 2015 revenue in excess of $71 million. While in fact, the State of Virginia found there was zero revenue which you would think the company’s, CEO – Andy Powers, Chairman of the Board – Ram Reddy and CFO – Tim Lee might have noticed this slight revenue rounding error.
Hey Folks, I didn’t graduate from Harvard, like Danny Boice (who is deeply entangled in the Communiclique story), I graduated from the University of Maryland with a non-math focused Liberal Arts degree. I am not the brightest bulb in the lamp. In fact, many of my fellow classmates at Maryland are grateful to this day that I helped them graduate in the top 85% of our class and yet even a math-challenged fellow such as I knows $0 is not in excess of $71 million.
The lawsuit alleges that the company supplied a fraudulent 3rd party valuation of $350 – $400 million. It is obvious that the company took a proposal to perform a valuation from a legitimate investment bank and doctored it to appear as if it was a valuation… again, remember I didn’t graduate with distinction from a top law school or from a law school or with distinction for that matter but this kind of feels to me like fraud and while I am not a legal scholar, I did run one of the top corporate governance advisory firms in the country and it is my opinion that if Ram Reddy and Tim Lee’s defense is they didn’t know the valuation was fraudulent, if they didn’t know that the companies revenue numbers were grossly inflated and the companies customer list was a fiction, they grossly breached their fiduciary responsibility. These guys are either crooked or morons.
The complaint asserts Ram Reddy’s son introduced the plaintiff to Ram. That Ram made representations about the firm multiple times, including during a sailing vacation with the Plaintiff, the Plaintiff’s son, Ram Reddy and his son about the value of the stock. The complaint states “Reddy then told the plaintive that shares of CommuniClique (DBA CliqueAPI) purchased at $5.76 were worth $25 to – $30 per share. Reddy claimed that at that valuation he was one of the wealthiest Indians living in the United States.” If Reddy winds up in prison I wonder if Ram Reddy will be one of the wealthiest Indians in Federal Prison?
According to the alegations from the suit, Reddy told the Plaintiff that Twilio was operating at a loss and CommuniClique was profitable so it would be more valuable over time than Twilio. Again, my math, so take this with a grain of salt but I don’t believe a company with expenses and no revenue can be profitable.
According to the lawsuit, based on representations made by Reddy, the Plaintiff asserts he “invested” an additional $1,462,250 worth of shares purchased from 8 investors smart enough to dump this stock. In addition, the Plaintiff’s parents who are non-accredited, retired public school educators purchased $288 thousand of stock priced at $5.76.
In December 2017 by Representatives of the Virginia State Corporation Commission contacted the Plaintiff about an investigation into Powers and Comunniclique. Subsequently, on April 2018, Powers sent a letter to Communiclique shareholders, in which powers denied the charges and offered to buy back any of the shareholders stock. Powers who in the near future will be known as Federal Prisoner #14432 never followed through on this offer.
At this time, Reddy turned into a ghost and the Plaintiff was unable to contact him.
Yet if the Plaintiff wanted to speak with Reddy he should have headed over to Rutgers because, in April 2018, Rutgers was awarding “The Richest Indian in the United States,” an alumni award. Wouldn’t it be great if Ram earned that award by donating worthless Clique stock?
The complaint seeks to recover cash and damages over $3.6 million and $288 thousand for his parents to include the cost of trial and attorney fees.
I can’t predict the outcome of this case and yet I can say this. A court in Virginia has already found that Communiclique, AKA CliqueAPI, AKA Clique, AKA Pile of Stinking Dung, is a criminal enterprise. A company that defrauded investors using investor money to enrich the principals. How much of that money if any, did Ram Reddy take? It isn’t clear. What seems clear is that Reddy was the Chairman of the Board, and is responsible for pitching and selling worthless stock to the Plaintiff and many others, including a group of Silicon Valley-based Indian investors who if they did invest are not likely to be the richest Indians in America either.
Ram Reddy has been involved in more than one Shady business and more than one shady character. He rented his home to two crooks, Andy Powers and Danny Boice. While he was renting a home to these two crooks, there are multiple credible assertions they were building Communiclique. According to multiple sources, Communiclique was the beneficiary of funding fraudulently obtained from The College Board. Before being fired for cause as a VP of the College Board, Danny Boice hired Powers and others to work on his side project Communiclique under the guise of software development for The College Board.
Was Ram Reddy as guilty as Andy Powers, the CEO or Tim Lee the CFO of this Dumpster Fire? As far as I’m concerned that question is like asking three pregnant men which one is more pregnant. Ram Ready was the Chairman of the Board and had a fiduciary responsibility to inspect and certify the books. It is a crime how many people invested in this company and how much money was lost on Ram’s watch.
Check out this video of Ram Reddy telling the story of how he got together with Andy Powers and listen to him pitch what we now know are a bunch of lies to a group at Rutgers University, gathered to honor the Chairman of the Board of s fraudulent company. (May 1, 2019 Update: Someone deleted the referenced youtube video.)
UPDATE April 7, 2019: Found a different video where Ram makes fraudulent claims about Communiclique’s Revenue, Valuation and Customer Acquisitions. His defense will probably be that he was only kidding! His defense may be that it’s not a lie if you don’t know your lying. The Chairman of the Board had a responsibility to know what was the truth. Reddy seems to claim he didn’t know. Ram Reddy categorically denies the allegations. Video of the eGov Symposium Andhra Pradesh India – Inaugural Session, on January 29, 2016.
Here is a list of the lies in that video:
He is introduced as Chairman of the Board of Directors at Clique. Stating he initiated the many of the groups largest (non-existent) customers and investor relationships. He has been a key component company’s growth, customer acquisition, and revenue growth.
And Ram Reddy then boasts several alternate facts:
- In 2006 we started a Comunniclique – Probably true
- We can make 20 million calls in 0.4 seconds (BS)
- That was a test done by Google (BS)
- Customers include (all BS)
- Federal Express
- Our valuation is close to a billion dollars (BS)
- And we’re growing 60% a year (BS)
August 8, 2019 Update: Yesterday I received a demand letter from an attorney, John P. Rowley III of SCHERTLER & ONORATO, LLP, who claims to represent Ram Reddy in which R. Rowley asserts:
“These statements, and the others you have made in prior blog publications, are false and malicious and intended to harm Dr. Reddy’s personal and business reputations by imputing to him the commission of a crime. Contrary to your reckless accusations,· Dr. Reddy lost a substantial sum of money as a result of Powers’ deceit and he is one of the main victims of Powers’ fraud scheme. Your statements constitute defamation per se and will not be allowed to stand unanswered.”
I have no intent to harm Dr. Reddy or anyone else. I’m trying to get to the truth. I’m asking questions, stating facts as I know them and voicing an opinion. In addition, I’m trying to protect investors from making the kind of mistakes to which Dr. Reddy claims he fell victim.
This letter led me to check what’s happening with Ram Reddy and I checked his LinkedIn page where I was surprised to find that he recently changed his title and the characterization of his relationship with Communiclique from Chair of the Board to Investor and he now emphatically states, “Not involved in running and management of the company at any time.”
That characterization significantly differs from a speech he made at the eGov Symposium in Tirupati, India on January 29, 2016. In that speech, he sounded pretty involved. In talks about his decade of experience with Communicliuqe. Just check out these excerpts.
Here is how he was introduced,
“Dr. Ram Reddy, Chairman of the Board of Directors of CommuniClique. He has initiated a number of the groups largest customers and (unintelligible) relationships. He has been a key component to the companies increase and customer increase and Revenue Growth.”
Who supplied that bio? Then Ram took to the podium and went on to say,
“I had a company before you know for which I exited in 2004. In 2006 we started a company Communiclique which is a conference bridging collaboration communication technology, The Communiclique platform is into cloud computing and we can make 20 million calls going out to clients in four-tenths of a second. That was a test done by Google about five years ago.
So our conference calls is in cloud and it can be scalable. For example, Uber started in 2009 for its taxi service we connect the clients and the passengers all on our application. Our APIs are integrated with the Uber which is now a almost a $70 Billion company about 6 or 7 years old company. So that is the kind of scaling we can do in a product like that.
So our scaling also we’re in AirBnB and Federal Express and Apple. So our enterprise clients are great and our valuation is almost a billion dollars now and we’re still growing 50 – 60% a year. So we continue to grow and we opened our office in Tirupati a couple of months ago now.
So our goal is to use our eGov our application to integrate with the eTirupati also so that way we can reach out to everybody across the state and across India.”
So I ask you… from Chairman of the board to not involved in running or managing the company at any time. He sure sounded deeply involved in company technology and sales.
For those uninitiated, here is how Investopedia defines the role of the Chairman of the Board.
“What Is a Chair of the Board (COB)?
A chair of the board (COB) holds the most power and authority on the board of directors and provides leadership to the firm’s officers and executives. The chair of the board ensures that the firm’s duties to shareholders are being fulfilled by acting as a link between the board and upper management.”
So is Ram Reddy a Master Criminal or just a Crappy Businessman? Is he a criminal or simply a dope? Did he spend a decade as Chairman of the Board of a company that the courts have found defrauded investors totally clueless that the revenue, customer wins, and valuation he frequently confidently boasted of were false claims? It’s hard to believe but it’s possible. Dr. Reddy asserts he took no part and had no knowledge of the fraud perpetrated by Andy Powers as CEO of Communiclique. He vigorously asserts his innocence.
I invite Dr. Reddy to post a response that will host here. He can contact me and explain any facts that I may have incorrect. If I have erred, I am eager to correct the record.
Update: See the decision here
Disclaimer: I volunteer my time and am an independent contractor for many organizations. The Views on my blog post are my own and do not represent the views of any of the organizations with whom I dedicate my time. That includes my clients in my coaching practice, the members of my Driven Forward ThinkTank, the University of Maryland. Mach37, The Founders Institute. These views also do not reflect the opinions for any organization that I was formerly associated with including, James Monroe Elementary School, where I graduated with distinction from 6th grade, Lexitron which I left in 1982, Montgomery Youth Hockey or Vistage an organization was grateful to be a part of and of which I happily parted ways in 2014.