Wednesday, October 8, 2008

Ex-Entellium Execs Charged With Fraud, Arrested

Two executives of Seattle-based Entellium Corp, CEO Paul Thomas Johnston and CFO Parrish L. Jones, were arrested and charged with fraud Tuesday night. According to the FBI, the two defrauded investors by reporting revenues far exceeding actual figures at the firm. According to a complaint filed in the U.S. district Court, Johnson and Jones told its board of directors that it had revenues of nearly $4M in 2006, when the revenues were just $582,789. The complaint also said that in 2008, the company reported revenues of $5.2M, when it actually only had $1.7M. The arrests came after a human resources employee discovered financial information in the desk of a former VP of Sales at the firm. According to a statement from the FBI, the false revenue numbers were used to attract approximately $50M in private investment. Johnston and Jones face up to 20 years in prison and a $250,000 fine. Entellium had raised funding from Seattle-based Ignition Partners, as well as Sigma Partners. The FBI said that the Ignition partners who served on Entellium's board said they would not have made such a significant investment had they been aware of the accurate revenue figures.