Introduction to the Case
A federal judge Monday found a Sunrise software company, subject of a 2022 NBC6 investigation, “defrauded and hoodwinked” a client who the judge ordered should be paid more than $500,000 in damages.
Chetu, a 25-year-old “software solution provider” that says it generates more than $70 million in annual revenue, “concocted a scheme and fabricated hope to entrap (Blue Chip Alliance) into a new phase of work to secure more monthly fees,” the judge found.
The Scheme and Fraud
The judge concluded Chetu “upper management — purported skilled developers — actively participated in a ‘bait and switch’ tactic and ratified or approved of the scheme that accrued routine fees at the expense of Blue Chip,” a family-owned business with 13 barbershops in the Pacific Northwest, known as “The Man Shop.”
In finding punitive damages of $362,400 were appropriate, U.S. District Judge David Leibowitz wrote, “describing (Chetu’s) conduct as being contrary to ‘conscience, morality or law’ vastly understates what occurred.”
Damages and Ruling
He also ordered Chetu (pronounced “chey-too”) to pay $145,200 in compensatory and actual damages, for a total award of $507,600.
The Sunrise-based software development company, Chetu, has sued unhappy customers who publicly criticize its work and is party to hundreds of lawsuits in Broward County, mostly filed by Chetu against clients who refuse to pay.
Reaction from Blue Chip Alliance
In a statement to NBC6, an executive with Blue Chip said, “This has been a long and difficult process for us. As a small business, sustaining a three-year legal battle in federal court was extremely challenging both financially and emotionally. But we felt it was important not to give up, despite the crushing cost.”
After first saying Wednesday that the company would send its response to the order to NBC6, a Chetu employee Thursday asked NBC6 not to publish this report. She cited what she called “threats” in an email sent to the company Wednesday night by a disgruntled former client celebrating the court’s order.
The Trial and Testimony
According to testimony in the three-day trial in June, Chetu was paid nearly $150,000 over 14 months to develop a point-of-sale software system for Blue Chip that never worked.
Chetu, the judge found, “concocted a scheme and fabricated hope to entrap Blue Chip into a new phase of work to secure more monthly fees” of about $10,000 a month for “truly worthless” software.
Reached outside court before he testified in June, Chetu CEO Atal Bansal had no comment on the matter.
Conclusion of the Judge
But Leibowitz had plenty to say in his 72-page order, concluding Chetu “upper management — purported skilled developers — actively participated in a ‘bait and switch’ tactic … a scheme to defraud Blue Chip into continuously paying monthly software development fees.”
The issues at trial were whether Chetu made fraudulent statements about the skill, experience, expertise, and employees who could perform the requested development services; and whether they regularly provided knowingly false “progress reports.”
Outcome and Future Actions
Leibowitz found Blue Chip proved Chetu violated the Florida Deceptive and Unfair Trade Practices Act and “committed fraud in the inducement when (Chetu’s project manager) stated that Blue Chip’s existing POS system was ‘antiquated’ and its only recourse was to walk away from its investment or have Chetu redevelop the system.”
Chetu argued it acted in good faith, but the judge found “Chetu has not come close to meeting its burden that it acted in good faith. Indeed, the trial evidence shows a complete lack of good faith by Chetu.”
In his statement to NBC6, Blue Chip managing member Michael Howe said, “We are very appreciative that the Court took the time to carefully review our case and for making such a detailed ruling. While some may see this as a lawsuit that was not over an enormous sum of money, it was to us as a small family-run business. It was also deeply important to us to see it through and stand up for what we believed was right.”
Conclusion
In addition to ordering damages, Leibowitz ruled he would also order Chetu to pay fees for Blue Chip’s attorneys — Bill Cassidy, Aaron McKown and Giovanna Castro — as well as prejudgment interest on the damages. Those amounts are yet to be determined.
FAQs
- What was the outcome of the federal judge’s ruling in the case of Chetu and Blue Chip Alliance?
The federal judge found Chetu "defrauded and hoodwinked" Blue Chip Alliance and ordered Chetu to pay more than $500,000 in damages. - What was the nature of the scheme concocted by Chetu?
Chetu "concocted a scheme and fabricated hope to entrap Blue Chip into a new phase of work to secure more monthly fees" of about $10,000 a month for "truly worthless" software. - How did Chetu respond to the court’s order?
A Chetu employee asked NBC6 not to publish the report, citing "threats" in an email sent to the company by a disgruntled former client celebrating the court’s order. - What was the reaction of Blue Chip Alliance to the court’s ruling?
Blue Chip Alliance expressed appreciation for the court’s detailed ruling and stated that it was important for them to see the case through and stand up for what they believed was right. - What are the next steps in the case?
The judge will order Chetu to pay fees for Blue Chip’s attorneys as well as prejudgment interest on the damages, with the amounts yet to be determined.
