SAN FRANCISCO (CN) - The former CEO of Pegasus Wireless Corp. pleaded guilty Thursday to securities fraud and conspiracy: issuing more than 490 million shares to satisfy the company's "bogus debt," and funneling more than $25 million of the proceeds to himself and his cronies.
Jasper Knabb faces up to 25 years in prison and fines of twice his ill-gotten gains at his Nov. 3 sentencing.
He caused Pegasus to issue the shares from 2005 to 2008, by which time more than 75 percent of the company's outstanding shares had been issued through fraud, the U.S. Attorney's Office said in announcing his guilty plea.
"By selling some of these fraudulent shares, Knabb, his family, friends, and associates netted a total of more than $25 million," prosecutors said in a statement. "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."
Knabb, 44, of Wenatchee, Wash., pleaded guilty to conspiracy to commit securities fraud, securities fraud, and falsifying books and records.
Pegasus' former CFO Stephen Durland has pleaded guilty to the same charges. He will be sentenced on Sept. 8.
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