Please E-mail suggested additions, comments and/or corrections to Kent@MoreLaw.Com.
Help support the publication of case reports on MoreLaw
Date: 02-12-2019
Case Style:
United States of America v. Elizabeth Ann Pierce
Case Number: 1:18-cr-00388-ER
Judge: Edgardo Ramos
Court: United States District Court for the Southern District of New York (New York County)
Plaintiff's Attorney: Sarah Lai and Vladislav Vainberg
Defendant's Attorney: Joshua Sabert Lowther
Description:
New York, NY - Former Ceo Of Alaska-Based Fiber Optic Cable Company Pleads Guilty To Wire Fraud And Aggravated Identity Theft For Defrauding New York Investment Companies
ELIZABETH ANN PIERCE, the former Chief Executive Officer of a telecommunications company based in Anchorage, Alaska, pled guilty today in Manhattan federal court to wire fraud and aggravated identity theft in connection with 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. PIERCE pled guilty before U.S. District Judge Edgardo Ramos.
Manhattan U.S. Attorney Geoffrey S. Berman said: “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. But in fact, the defendant faked those contracts, forged other people’s signatures on them, and then lied to cover up her fraud. She abused her executive position and is now being held accountable for her crimes.”
According to the Complaint, the Indictment, statements made in court, and publicly available documents:
Until July 2017, PIERCE was the chief executive officer of Quintillion, a telecommunications company based in Anchorage, Alaska 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”). 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. Under another Fake Revenue Agreement, the customer purportedly agreed to buy a fixed, predetermined amount of capacity from Quintillion regardless of subsequent market conditions. In truth, that customer was not obligated to buy any capacity.
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. Quintillion self-reported PIERCE’s conduct to the Department of Justice.
* * *
PIERCE, age 55, now of Austin, Texas, pled guilty to one count of wire fraud, which carries a maximum sentence of 20 years in prison, and eight counts of aggravated identity theft, each of which carries a mandatory 2-year term of imprisonment, of which at least 2 years must be consecutive to any term of imprisonment imposed on the wire fraud count.
PIERCE is scheduled to be sentenced by U.S. District Judge Edgardo Ramos on May 16, 2019, at 11:00 a.m.
The maximum potential sentences in this case are prescribed by Congress and are provided here for informational purposes only, as any sentencing of the defendant will be determined by the judge.
Mr. Berman praised the outstanding investigative work of the Federal Bureau of Investigation.
Charges:
18:1343.F WIRE FRAUD
(1)
18:1343.F FRAUD BY WIRE, RADIO, OR TELEVISION
(1s)
18:1028B.F FRAUD WITH IDENTIFICATION DOCUMENTS (AGGRAVATED IDENTITY THEFT)
(2s-9s)
Outcome: 02/11/2019 Minute Entry for proceedings held before Judge Edgardo Ramos:Change of Plea Hearing as to Elizabeth Ann Pierce held on 2/11/2019., Plea entered by Elizabeth Ann Pierce (1) Guilty as to Count 1s,2s-9s. Defendant present w/ counsel Joshua Lowther, Esq. AUSAs Vlad Vainberg and Sarah Lai present. FBI Agents Sean Bartink and Alexander Turczak present. Court reporter: Steve Greenblum. Defendant withdrew previously entered not guilty plea and enters guilty plea to counts 1 through 9 of the S1 Indictment. PSI Ordered. Counsel may be present at interview. Sentencing scheduled for May 16, 2019, at 11:00 am. Bail continued. (jw) (Entered: 02/11/2019)
02/11/2019 Change of Not Guilty Plea to Guilty Plea as to Elizabeth Ann Pierce (1) Count 1s,2s-9s. (jw) (Entered: 02/11/2019)
02/11/2019 Order of Referral to Probation for Presentence Investigation and Report as to Elizabeth Ann Pierce. (Signed by Judge Edgardo Ramos on 2/11/2019)(jw) (Entered: 02/11/2019)
02/11/2019 Minute Entry for proceedings held before Judge Edgardo Ramos as to Elizabeth Ann Pierce; Sentencing set for 5/16/2019 at 11:00 AM before Judge Edgardo Ramos. (jw) (Entered: 02/11/2019)
Plaintiff's Experts:
Defendant's Experts:
Comments: