Former CEO of Alaska fiber-optic firm faces fraud charge
Federal authorities have charged the former CEO of a high-profile Alaska fiber-optic company with committing fraud in claiming more than a quarter of a billion dollars in future revenue to woo investments for a project to link Northwest Alaska communities.
Elizabeth Ann Pierce, who once headed Quintillion Ventures, surrendered herself Thursday morning to FBI agents in New York City, according to the U.S. attorney’s office in the Southern District of New York. She stands accused of one count of wire fraud.
According to a paraphrased complaint in the statement, the fraudulent activity occurred between May of 2015 and July 2017 as the company worked on an undersea cable linking northern Alaska communities meant to eventually provide polar communications.
Quintillion was among companies which objected to the proposed merger of telecommunications firm GCI with Colorado-based Liberty Interactive Corp.
A key element of the company’s funding involved persuading two New York-based companies to invest in the project, based on unsigned sales agreements which Pierce allegedly forged signatures on. She resigned soon after the fraud was discovered, according to the complaint.
“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 Agreements,” the complaint read.
Quintillion spokeswoman Kristina Woolston said Thursday afternoon that Quintillion had itself reported the fraud to the FBI last year. A statement from the company Thursday said “the alleged actions of Ms. Pierce are not aligned with how Quintillion conducts business.”
The Arctic Slope Regional Corp., a minority investor in undersea elements of the Quintillion cable project, said in a statement Thursday afternoon that it “will remain a minority investor.”
“While the alleged behavior is not aligned with ASRC’s values, we applaud the Quintillion board of directors for their swift action upon discovery of this purported misconduct and their self-reporting to the Justice Department,” ASRC officials wrote. “This will not impact our involvement in the Subsea Cable Project.”
A spokesperson for the Southern District of New York said Thursday that prosecutors couldn’t comment on whether any additional charges were expected in the investigation, but said the company itself isn't facing charges.
U.S. Attorney Geoffrey S. Berman said Pierce’s forgery had left investors with “a system that is worth far less than Pierce had led them to believe.”
“To realize her plan to build a fiber optic system that would service Alaska and connect it to the Lower 48 states, [Pierce] allegedly convinced two investment companies that she had secured signed contracts that would supposedly generate hundreds of millions of dollars in guaranteed future revenue from the system,” Berman said. “As it turned out, those sales agreements were worthless because the customers had not signed them.”
William F. Sweeney, assistant director of the FBI's New York field office, said the case came to light through due diligence on the part of an affected party.
“In this case, thanks to a customer who was paying close attention to their invoices and noticed something was up, Pierce’s alleged scheme began to fall apart,” Sweeney said. “The false agreements she tried to pass off as legitimate didn’t add up. In the end, her alleged crime was discovered.”
Pierce had resigned “citing personal reasons,” according to a Quintillion statement in August, and was replaced by interim CEO George M. Tronsue III.
Quintillion's statement Thursday afternoon emphasized that the company's operations have not been affected by the allegations.
“The ongoing investigation has not impacted Quintillion’s operations nor the quality of its services,” company officials wrote. “Quintillion continues to move aggressively to extend its network and provide world-class telecommunications to Alaska and beyond.”
Lauren Maxwell contributed information to this story.
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