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Technology Stocks : USWC-U.S.Wireless -- Ignore unavailable to you. Want to Upgrade?

To: RockyBalboa who wrote (135)	7/15/2003 3:34:05 PM
From: Rhys Roberts	Respond to of 136

The Story gets even better............. story.news.yahoo.com Former U.S. Wireless execs charged Tue Jul 15,11:30 AM ET By Jon Fortt, Mercury News Two former executives of San Ramon-based U.S. Wireless (news - web sites) were charged Monday with defrauding investors in an elaborate scheme involving funneling money to offshore companies they controlled. Former Chief Executive Oliver Hilsenrath and David Klarman, former general counsel, created five consulting companies that they used to take more than $3.6 million between August 1997 and January 2000, federal authorities say. U.S. Wireless has since gone bankrupt and has sold its assets. The U.S. Attorney's Office for Northern California, the Securities and Exchange Commission (news - web sites) and the Federal Bureau of Investigation announced separate civil and criminal charges against the men Monday. U.S. Wireless made equipment to help pinpoint the location of cell phones. The technology was supposed to support the federal government's "E911" mandate that by the end of 2001, cell phone carriers be able to locate subscribers who call 911. But carriers did not meet the federal deadlines, and U.S. Wireless never turned a profit. Since U.S. Wireless was never a successful company, this case is more significant for the brazen nature of the charges. "The case doesn't involve faking sales or expenses, it involved more or less pure stealing," said Robert Mitchell, assistant district administrator with the SEC office in San Francisco. Mitchell said Hilsenrath and Klarman gave themselves unauthorized stock grants and wired themselves money, using the offshore consulting companies as a front. Hilsenrath and Klarman each were indicted on three counts of securities fraud. Each count has a maximum penalty of 10 years in prison and $1 million fine. Hilsenrath also was indicted on 33 counts of wire fraud, and Klarman was indicted on 16 counts of wire fraud. Each of those counts carries a maximum penalty of five years in prison and a $250,000 fine plus restitution. The FBI (news - web sites) arrested Klarman on Monday at his home on Long Island, N.Y. He was scheduled to appear in federal court later in the day. An arrest warrant was issued for Hilsenrath, who resides in Israel. Federal authorities said they will seek to extradite him. Klarman's lawyer did not return a phone call Monday. According to the complaint, Hilsenrath and Klarman used Matheson Trust, an English Channel Islands-based corporate services firm, to create the shell companies. The SEC said Klarman created Biskara Limited in July 1996 and changed its name to KS Legal Consultants Limited about a year later. In August 1998, Klarman signed an agreement with KS Legal that it would provide U.S. Wireless with legal consulting regarding overseas business. "Our allegation is that there were no services provided," Mitchell said. Donald Miod, a Mission Hills-based expert in corporate fraud cases, said it might be difficult for prosecutors to prove that the offshore companies did not provide any services to U.S. Wireless. In cases like this one, defendants try to provide invoices, contracts and notes to prove that productive meetings occurred. Miod, who said he has followed fraud cases for 30 years, said the economic boom provided fertile ground for corporate deception. "I think more of it comes to the surface because of the post-Enron, Arthur Andersen time period. But there's never been a shortage of fraud. It happens in good times and bad times. It happens a bit easier in good times because people don't look as closely."