Former CEO of Pegasus Wireless Pleads Guilty to Securities Fraud Charges
| U.S. Attorney’s Office July 28, 2011 |
SAN FRANCISCO—The former CEO of Pegasus Wireless Corporation, a wireless technology company based in Fremont, Calif., pleaded guilty in federal court in San Francisco today to conspiracy to commit securities fraud, securities fraud, and maintaining false books and records, United States Attorney Melinda Haag announced.
In pleading guilty, Jasper Knabb admitted that he executed a scheme to defraud in which he created 31 fake promissory notes and other documents representing that Pegasus had outstanding debt. Knabb had Pegasus issue shares to satisfy the debt and then had those shares, or assets from their sale, funneled to himself, family, friends, and associates. Between May 2005 and January 2008, Knabb caused Pegasus to issue more than 490 million shares to satisfy bogus debt. By February 2008, Pegasus had issued more than 75 percent of its outstanding shares through this fraudulent scheme. By selling some of these fraudulent shares, Knabb, his family, friends, and associates netted a total of more than $25 million. Knabb also caused Pegasus to file reports with the SEC that falsely reported that the company had issued shares to satisfy a legitimate debt, and that concealed that Knabb and his associates had received the majority of those shares.
“My office will continue vigorously to prosecute defendants who, like Mr. Knabb, abuse their positions of trust to enrich themselves at the expense of company shareholders,” United States Attorney Haag said.
Knabb, 44, of Wenatchee, Wash., was charged by information on Jan. 10, 2011. He was charged with one count each of conspiracy to commit securities fraud, securities fraud, and falsifying books and records, in violation of Title 18, U.S.C. § 1349; Title 18, U.S.C. § 1348, and Title 15, U.S.C. §§ 78m(b)(2)(A), 78m(b)(5) and 78ff, respectively. Knabb pleaded guilty to all three counts.
Knabb is scheduled to be sentenced by Judge Jeffrey S. White on Nov. 3, 2011. The maximum statutory penalty for the conspiracy count and for the securities fraud count is twenty-five years of imprisonment and a fine of twice the gross gain or loss, plus restitution. The maximum statutory penalty for the count of falsifying books and records is twenty years of imprisonment and a fine of twice the gross gain or loss, plus restitution. However, any sentence following conviction would be imposed by the court after consideration of the U.S. Sentencing Guidelines and the federal statute governing the imposition of a sentence, 18 U.S.C. § 3553.
The former CFO of Pegasus, Stephen Durland, was charged with and pleaded guilty to the same set of charges. He is scheduled to be sentenced on Sept. 8, 2011, before Judge White in San Francisco.
Jonathan Schmidt is the Assistant United States Attorney who is prosecuting the case with the assistance of Ponly Tu and Elizabeth Garcia. The prosecution is the result of a two-year investigation by the FBI. The SEC also assisted in the investigation.
Further Information:
Case #: CR 11-0009 JSW
A copy of this press release may be found on the U.S. Attorney’s Office’s website at www.usdoj.gov/usao/can.