Skip to main content
IT Operations

Data center fraud case reveals importance of tier system

Deepak Jain faces six counts of fraud and one of making false statements for a maximum total sentence of 65 years.
article cover

Jonathan Nackstrand/Getty Images

3 min read

Top insights for IT pros

From cybersecurity and big data to cloud computing, IT Brew covers the latest trends shaping business tech in our 4x weekly newsletter, virtual events with industry experts, and digital guides.

Tier time—a data center provider is facing federal fraud charges for misrepresenting his business to secure a deal from the Securities and Exchange Commission (SEC) worth nearly $11 million.

Deepak Jain, the CEO of an unnamed data center company, was indicted Oct. 15 on charges that he fraudulently claimed his company operated a certified Tier IV data center. Such a certification is issued by the Uptime Institute, a digital infrastructure management institution. According to the Department of Justice (DOJ), Jain created a separate entity, the deceptively-named Uptime Council, which then “certified” his company at Tier IV, the highest level.

“Jain orchestrated a yearslong scheme to defraud the SEC by falsely certifying that his company’s data center met the highest rating level, when the actual rating did not satisfy the SEC contract,” Principal Deputy Assistant Attorney General Nicole M. Argentieri said in a statement.

Uptime Institute’s tier classifications for data centers are useful for understanding what facility is best suited to the needs of a company or service. As Uptime details in a breakdown of the system, the system helps to “explain the infrastructure required for data center operations.”

“There are different tiers according to the system availability needed,” Uptime said. “These classifications are objective and reliable methods for comparing the performance of one site infrastructure against another and aligning infrastructure investments to business goals.”

Tier dropped. Each successive tier contains the lower tier requirements and adds more responsibilities. This doesn’t necessarily mean that a higher tier is “better”—just more suited to the needs of larger systems. The tiers “match a particular business function and define criteria for maintenance, power, cooling, and fault capabilities,” Uptime explained.

Jain using a dummy version of the tier system as a way to obtain an SEC contract constituted fraud, the DOJ alleged. False certification letters claiming his company was at Tier IV led the SEC to enter into a contract with Jain and store data at his company, according to the indictment.

On the experience page of his LinkedIn, Jain lists founding data center company AiNET in February 1993. It is not confirmed if AiNET was the company in question in the indictment as the DOJ did not name the firm.

Defiant. Jain faces six counts of fraud and one of making false statements for a maximum total sentence of 65 years. In a statement to The Record, Jain’s attorneys said their client and his company “performed fully under the SEC contract.”

“There is no evidence that any data was lost or compromised in any way,” Jain’s lawyers said. “Mr. Jain is an innocent man who looks forward to confronting these charges at trial.”

Top insights for IT pros

From cybersecurity and big data to cloud computing, IT Brew covers the latest trends shaping business tech in our 4x weekly newsletter, virtual events with industry experts, and digital guides.