Tech CEOs Who Were Jailed

Snigdha Sandip

Power and money are two entities that are capable of driving people to illegal activities. These are two most tempting drugs that can make people dishonest and corrupted. The world of business often witness CEOs who become victims of these and spend time behind bars. Some commit major offences, while some may be booked for possessing illegal items. Here, we have a list of jailbird CEOs from the tech industry who used their talent to engage in extra-legal activities and unfortunately, got caught on the run.

Bernie Ebbers, WorldCom

Ebbers is the co-founder and former CEO of telecommunications company, WorldCom. He is popularly known as the Telecom Cowboy, because of his selection of jeans and cowboy boots. In 2005, he found guilty of fraud and conspiracy as a result of company’s false financial reporting. He violated the state’s security laws by defrauding investors on multiple occasions. He had over-estimated the revenues by $5 billion over seven quarters and thereby, caused a loss of $100 billion to the investors. The WorldCom scandal was the largest accounting scandal in theUnited States’ history until the Madoff schemes came to light in 2008. He is currently serving a 25-year prison term at Oakdale Federal prison inLouisianaand he drew himself in a Mercedes to the prison.

Sanjay Kumar, Computer Associates

In 1987, Sanjay Kumar joined Computer Associates as an employee and in 2000 he became the chairman and CEO of the firm.  In April 2004, he resigned from both the posts, when he was found guilty of acts including securities fraud and obstruction of justice. He was accused of financial manipulation where income in one quarter is supplemented with revenue from the next in order to meet Wall Street expectations.  He was sentenced to a 12 year imprisonment and a fine of $8 million for his $2.2 billion fraud case. He is currently serving his 12 years in Federal prison,New Jersey.

Joe Nacchio, Qwest

Jeo was the chairman and CEO of the Qwest Communications International from 1997 to 2002. He was found guilty of insider trading in Qwest stock on April 19, 2007. He used the information he received from jail to sell $52 million in stocks at a profitable price. He mislead the stake holders by telling them that he can meet aggressive revenue targets long after he knew that they could not be achieved. He believed that Qwest was doing well because it was getting some big Federal contracts. After he was found guilty, he claimed that he was not in a correct state of mind because of his son’s problems. In 2009, the court sentenced him to six years of imprisonment in federal prison,Pennsylvania, and to pay a fine of $19 million and forfeit $52 million he gained in illegal stock sales.

John Rigas, Adelphia

John Rigas  is  the co-founder of Adelphia Communications Corporation, which was one of the largest cable TV companies in theUnited Statesbefore it went bankrupt. He was also the majority owner of the Buffalo Sabres franchise of the National Hockey League. In 2002, he along with his sons and some executives was found guilty of fraud cases. They looted the corporation by hiding $2.3 billion in liabilities from corporate investors and for using corporation funds as their personal funds. He was convicted in 2004 and in 2005, he was sentenced to 15 years of imprisonment and his son was sentenced to 20 years of imprisonment. Later, a Federal judge reduced his imprisonment to 12 years. He is now inNorth Carolinafederal prison.

Paul Johnston, Entellium

Paul Johnston is the former CEO of Seattle-based Entellium Corp. In 2008, he was arrested along with Parrish L. Jones, former chief financial officer, for reporting false revenues to get $50 million in investment. Entellium was a highly flourished CRM software company and Intuit offered $100 million to buy the company. But, he declined the offer knowing that the company’s books could not withstand the inspection of a due-diligence audit. They inflated the actual revenue of $582,789 to nearly $4 million; in 2008 $1.7 million revenues were inflated to $5.2 million to get $50 million investments. He is currently serving a 3-year prison term. Later the software was sold to Intuit in bankruptcy court.

Frances Flood, ClearOne Communications

Flood is the Chairman, President and CEO of ClearOne Communications. She adopted the channel stuffing scheme in which she directed the sales personnel to dump more ClearOne products than what the company is capable of selling in to the distribution channel and she promised distributors that they need not pay for the merchandise until it was sold to customers, but still booked them as sales. Through this she was able to meet the revenue targets.  She was accused of maintaining overstatement of revenue and accounts. In 2009, she was sentenced to four years of imprisonment.

Michael Peppel, MCSi (Miami Computer Supply)

Michael Peppel is the former top executive of MCSi Inc. He was found guilty for his felony crimes related to the company’s 2003 collapse and insolvency. The investigators noticed a number of transactions between his company and the previously listed Frances Flood’s ClearOne Communications and consequently he was sentenced for seven day imprisonment. He was convicted for willful false certification of a financial report by Frances Flood; money laundering, and conspiracy to commit securities fraud. Peppel has committed to pay $3,000 per month toward his $5 million fine. At that rate, it will take him 138 years to pay off.

Jeremy Blackburn, Canopy Financial

Jeremy Blackburn is the Founder of Canopy Financial which was a health care transaction software manufacturer. He along with the CTO Anthony Banas was convicted for defrauding investors and clients of more than $93 million. In that, he misappropriated more than $18 million from customer accounts intended for health care savings and expenses. In a fraud scheme, they cheated investors of approximately $75 million. With the money,Blackburnbought a number of luxury cars including Bentley’s and Rolls Royce. He was sentenced to serve 15 years in jail along with Banas, who got 13 years.

Jeff Hawn, Attachmate

Jeff Hawn is a software executive of Attachmate. Jeff Hawn warned his neighbor to keep his bison from roaming onto his property or risk having them hunted. In 2008, he did what he said. He and his hired hunters fired 32 of his neighbor’s bison which wandered into Hawn’sColoradoranch. They also shot down cows carrying calves. In November, 2008 he was sentenced to serve 10 days inColorado’sParkCountyjail for committing criminal mischief and animal cruelty.

Later, he was released on a $15,000 bail.



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