Elizabeth Ann Pierce, the former Chief Executive Officer of a telecommunications company based in Anchorage, Alaska, pled guilty in Manhattan federal court to wire fraud and aggravated identity theft, Monday.
The plea related to a scheme to use forged guaranteed revenue contracts fraudulently to induce investors to invest more than $250 million into her company for the construction of a fiber optic cable network in Alaska.
"As she admitted today, Elizabeth Ann Pierce engaged in a brazen, multi-year scheme to obtain over $250 million from investors by misrepresenting that she had guaranteed revenue contracts with multiple telecommunications services companies."
Until July 2017, Pierce was the CEO of Quintillion, a telecommunications company based in Anchorage, that built, operates, and markets a high-speed fiber optic cable system (the “Fiber Optic Cable System”).
This System consists of three segments: a subsea segment that spans the Alaskan Arctic; a terrestrial segment that runs north to south along the Dalton Highway; and a land-based network of fibers that connects the subsea and terrestrial segments. The Fiber Optic Cable System is connected to the lower 48 states through other existing networks.
Between May 2015 and July 2017, Pierce engaged in a scheme to induce two investment companies to provide more than $250 million to construct the Fiber Optic Cable System by providing them with eight forged broadband capacity sales contracts and related order forms under which Quintillion would obtain guaranteed revenue once the Fiber Optic Cable System was built (the “Fake Revenue Agreements”), the US Department of Justice informed.
Under the Fake Revenue Agreements, four telecommunications services companies appeared to have made binding commitments to purchase specific wholesale quantities of capacity from Quintillion at specified prices.
The cumulative value of the Fake Revenue Agreements was more than $24 million during the first year of the subsea segment’s operation, approximately $10 million during the first year of the terrestrial segment’s operation, and approximately $1 billion over the life of the Fake Revenue Agreements.
In reality, the Fake Revenue Agreements were completely worthless because Pierce had forged the counterparties’ signatures.
Certain of the Fake Revenue Agreements never existed at all, while others were falsified versions of genuine revenue agreements. Pierce fabricated the terms of the false versions of the agreements to make them more favorable to Quintillion and, therefore, more appealing to investors than the genuine agreements.
For example, under one of the Fake Revenue Agreements, the customer purportedly agreed to buy increasing amounts of gigabits per second of capacity over a period of 20 years from Quintillion. That agreement, if genuine, would have assured Quintillion hundreds of millions of dollars in future revenue. In reality, negotiations over that deal had ended unsuccessfully, which fact Pierce never disclosed to the investors.
After the terrestrial system was built, Pierce attempted to prevent the discovery of the Fake Revenue Agreements by accelerating the timing of incoming payments under certain genuine agreements to make those payments appear to be based on the Fake Revenue Agreements.
Pierce also sought to prevent Quintillion and the investors from invoicing one of the customers that had no real contract with Quintillion by fabricating e-mail correspondence Pierce purportedly had with that customer. Pierce’s scheme started to unravel when a customer disputed invoices that it received from Quintillion pursuant to one of the Fake Revenue Agreements.
Shortly thereafter, in the midst of Quintillion’s internal investigation, Pierce abruptly resigned.
Source:safety4sea
