Former Qualcomm vice president, Karim Arabi, was sentenced in federal court in San Diego to four years in prison for orchestrating a long-running fraud and money-laundering scheme involving microchip technology.
While working in Qualcomm's research and development division, he secretly developed technology - assigned to the company per an employment agreement - then arranged to market it through a shell company called Abreezio that he controlled, but concealed from his employer.
Qualcomm ultimately paid about $150 million for the technology, with nearly $92 million routed to Arabi's sister under the false pretense that she was the inventor, supported by fabricated emails and a fictitious resume.
The proceeds were laundered through shell entities and used to buy 15 luxury properties in Canada and Norway. The conspirators continued concealing the scheme even after Qualcomm filed a civil fraud lawsuit, including creating a fake research notebook and deleting emails.
In April 2025, a jury convicted Arabi of conspiracy to commit wire fraud, wire fraud, and money laundering. At sentencing, the court ordered forfeiture of more than $45 million, additional overseas real estate, and over $100 million in restitution. Prosecutors and investigators characterized the conduct as a profound breach of trust and an elaborate corporate fraud.
Source: https://www.yahoo.com/news/articles/former-qualcomm-executive-sentenced-prison-212635230.html
Commentary
In the above scenario, the employee used his employer's resources and received pay as an employee to create an intellectual property. Then, without his employer knowing it, the employee sold it back to the employer, even though his employer owned it.
Employees who create intellectual property as part of their job duties usually do so with the organization's time, tools, and confidential information. In many jurisdictions and under most employment agreements, intellectual property developed in this context belongs to the employer, even if a patent or product is later registered in an individual's name.
When an employee secretly claims this IP as personal property, forms an outside entity and then sells the same IP back to the organization, the result is a hidden self-dealing transaction: the employer is paying twice, once in salary and again in purchase price, for an asset it already owns.
This type of fraud is particularly difficult to detect because it is often wrapped in legitimate-looking contracts, technical language, and assurances about "independent" inventors or third-party vendors.
Organizations are most vulnerable when they lack clear IP ownership policies, detailed conflict-of-interest disclosures, and independent verification of who actually developed key technology or creative work.
Risk increases when a single insider controls both the technical details of a project and the vendor selection or acquisition process, allowing them to steer decision-makers toward a shell company or friendly intermediary.
Warning signs can include employees pushing to buy IP from obscure entities, resistance to legal review of assignment documents, unexplained personal connections to vendors, and inconsistent narratives about how and where the IP was developed.
Effective loss prevention starts with unambiguous employment agreements assigning work-related IP to the organization and requiring prompt disclosure of inventions.
These contracts should be backed by training so managers and staff understand that outside commercialization of employer-funded innovations without consent is prohibited.
Compliance teams should scrutinize IP acquisitions with the same rigor applied to major capital purchases, including background checks on counterparties, review of development timelines, and confirmation that no current or recent employee has an undisclosed financial interest.
Internal audit and legal should collaborate to map critical research and development projects, track who worked on them, and ensure that any proposed IP acquisition is not simply repurchasing the organization's own work under a different name.
