The FBI says that Elizabeth Ann Pierce, who was CEO of the subsea and terrestrial fibre company until July/August 2017, used “forged guaranteed revenue contracts to fraudulently induce investors to invest more than $250 million” in the company.
The allegedly forged agreements claimed that Quintillion had guarantees of revenue of $1 billion, says the FBI.
Quintillion says that it “became aware of the situation” last year and “took swift action and self-reported to the Department of Justice (DoJ)”. The company added: “Quintillion has been cooperating fully with the authorities during this ongoing investigation.”
According to the FBI’s deposition, Pierce pretended to have agreements with five unnamed telecoms firms based in Alaska. She showed the allegedly fake agreements to an unnamed private equity company based in New York and to a French corporate and investment management and asset firm, with the aim of persuading them to invest “over $250 million” in Quintillion.
Quintillion has a terrestrial fibre running north to south across Alaska and a subsea fibre, put into service in late 2017, running round the coast. Quintillion’s long-term aim is to extend the subsea fibre west to Japan and east through northern Canada to Europe.
Quintillion announced on 18 May 2016 that it had acquired the assets of Arctic Fibre as part of a plan to build a submarine fibre optic cable from Asia to Europe with the first phase in Alaska.
It said at the time: “Quintillion will build, own and operate the network” and added: “The founding shareholders of Arctic Fibre hold an ownership stake in Quintillion and Michael Cunningham, the CEO of Arctic Fibre, has joined the board of Quintillion. Cooper Investment Partners, a New York-based private investment firm, is the majority investor in Quintillion.”
Cunningham, now CEO of Crosslake Fibre and chairman of Ireland France Subsea Cable, was CEO of Toronto-based Arctic Fibre until it was acquired by Quintillion in 2016. Cunningham is on Quintillion’s board. Capacity has asked him to comment but has not yet received a reply.
The FBI documents say that “the cumulative value of the fake revenue agreements was more than $24 million during the first year of [Quintillion’s] subsea system’s operation, approximately $10 million during the first year of the terrestrial system’s operation, and approximately $1 billion over the life of the agreements”.
US attorney Geoffrey Berman said: “As it turned out, those sales agreements were worthless because the customers had not signed them. Instead, as alleged, Pierce had forged counterparty signatures on contract after contract. As a result of Pierce’s deception, the investment companies were left with a system that is worth far less than Pierce had led them to believe.”
According to her LinkedIn entry Pierce became president and CEO of Quintillion Networks in December 2013 after having been director of risk management at Alaska Communications. The entry describes her as “semi-retired” from August 2017.
The FBI deposition says that its officers interviewed Pierce on 25 July 2017 and were due to continue the interview on the following day. She cancelled the second interview, citing – via her lawyer – ill health. Quintillion announced her resignation “for personal reasons” on 8 August 2017, and appointed George Tronsrue as interim CEO. Pierce handed herself in for arrest yesterday, said the DoJ.
FBI assistant director William Sweeney said: “It’s important for stakeholders to maintain a certain level of awareness into how their investments are being managed. 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.” The FBI does not name the customer.
Sweeney continued: “The false agreements she tried to pass off as legitimate didn’t add up. In the end, her alleged crime was discovered. Today’s charges highlight our commitment to detecting financial crimes of all kinds, and protecting those victims who invest their hard-earned money with those looking to make an easy profit.”
Kristina Woolston, Quintillion’s vice president of external relations, said: “Quintillion is proud of the project we have built and are committed to expand the footprint of our fibre optic network. This is a transformative project for Alaska and beyond.”
