Feeds

e-district.net finds £1m blackhole

Discovers 'collusion' at the company

  • alert
  • submit to reddit

Reducing security risks from open source software

Shareholders of e-district.net were misled about the company's financial performance to the tune of £1 million according to an initial report into irregularities at the company.

Although the investigation is ongoing, a preliminary report has found that there was "substantial overstatement of registered users, page impressions and revenues".

It has also identified evidence of "collusion within the company".

Last month Steven Laitman, Chief Executive of e-district.net, was dismissed amid a thorough investigation into the company's affairs.

He was subsequently served with an injunction freezing his assets and is in the process of being sued for damages.

It's understood he will contest the proceedings.

Despite the proximity of legal proceedings, a statement issued by the company today appears to shed some light on the activities at the company during the last couple of years.

The investigation found that revenues for the 17 months ended 31 December 1999 were only around £98,000. E-district had formally reported revenues of £781,571.

Likewise, the revenues reported in the unaudited half-year report for the six months ended 30 June 2000 were £1,038,069. However, the investigation discovered that revenues during this period were actually nearer £32,000.

Subsequent revenues are said to be "negligible".

In a statement today the company linked the discrepancy to Mr Laitman.

It claims that a "substantial majority of the monies received by the company's bankers and recorded in the company's records as being received from sales agencies was in fact received from bank accounts linked to Mr Laitman with fabricated supporting documentation indicating that such receipts were from sales agencies."

"It appears that in total approximately £1.0 million has been received in this way between (and including) November 1999 and February 2001 and credited against false trade debtors," it said.

The investigation has also found that usage figures were also inflated.

In January the company said it had 2.6 million active users at the end of December 2000 and boasted 367.1 million page impressions a month.

The investigation has found that in January 2001, the outfit had just 52,768 registered users and 54.4 million page impressions a month.

E-district also reported today that it has suspended two senior managers within the technical department - one of whom has now resigned.

The company also confirmed that it has also held discussions with the Fraud Squad. ®

Related Stories

e-district.net calls in fraud squad?
e-district.net sacks CEO
E-district.net CEO accused of inflating figures

Eight steps to building an HP BladeSystem

More from The Register

next story
BBC goes offline in MASSIVE COCKUP: Stephen Fry partly muzzled
Auntie tight-lipped as major outage rolls on
iPad? More like iFAD: We reveal why Apple fell into IBM's arms
But never fear fanbois, you're still lapping up iPhones, Macs
White? Male? You work in tech? Let us guess ... Twitter? We KNEW it!
Grim diversity numbers dumped alongside Facebook earnings
HP, Microsoft prove it again: Big Business doesn't create jobs
SMEs get lip service - what they need is dinner at the Club
Bose says today IS F*** With Dre Day: Beats sued in patent battle
Music gear giant seeks some of that sweet, sweet Apple pie
Amazon Reveals One Weird Trick: A Loss On Almost $20bn In Sales
Investors really hate it: Share price plunge as growth SLOWS in key AWS division
Dude, you're getting a Dell – with BITCOIN: IT giant slurps cryptocash
1. Buy PC with Bitcoin. 2. Mine more coins. 3. Goto step 1
There's NOTHING on TV in Europe – American video DOMINATES
Even France's mega subsidies don't stop US content onslaught
prev story

Whitepapers

Top three mobile application threats
Prevent sensitive data leakage over insecure channels or stolen mobile devices.
Implementing global e-invoicing with guaranteed legal certainty
Explaining the role local tax compliance plays in successful supply chain management and e-business and how leading global brands are addressing this.
Boost IT visibility and business value
How building a great service catalog relieves pressure points and demonstrates the value of IT service management.
Designing a Defense for Mobile Applications
Learn about the various considerations for defending mobile applications - from the application architecture itself to the myriad testing technologies.
Build a business case: developing custom apps
Learn how to maximize the value of custom applications by accelerating and simplifying their development.