Feeds

Former Enterasys chief pleads guilty to fraud

Pumped fiction

  • alert
  • submit to reddit

Security for virtualized datacentres

The former chief executive officer of networking firm Enterasys this week pleaded guilty to fraud over an illegal scheme to talk up the firm's share price three years ago.

Enrique “Henry” P. Fiallo, 52, of Hampton Falls, New Hampshire, pleaded guilty to a single charge of conspiracy to commit mail, wire and securities fraud. He admitted participation in a scheme to fraudulently inflate Enterasys' reported revenues by $20m for the three months ending 1 September 2001. As part of his plea, Fiallo has agreed to cooperate with the government in its ongoing inquiries into Enterasys' finances.

The co-conspirators allegedly caused Enterasys to mislead investors and the Securities and Exchange Commission by falsely claiming that it had met or exceeded previously announced revenue targets and analyst estimates. They did this by using Enterasys funds to invest in fictitious companies that used the money pumped into them to (at least on paper) buy Enterasys' kit.

Fiallo faces a maximum sentence of five years in prison and a fine of $250,000 or twice his gain from the scam, whichever is greater. Sentencing at US District Court in Concord, New Hampshire has been set for 17 December 2004.

An indictment returned by a federal New Hampshire grand jury in May 2004 charges two former Enterasys executives - ex-chief financial officer Robert Gagalis and former SVP of finance Bruce Kay - with fraud and conspiracy charges for their participation in a fraudulent revenue transaction with a China-based company called Ariel. Three other defendants - Gayle Spence Luacaw, a former SVP of internal sales at Enterasys, Gary Workman, a former president of Enterasys’ APAC Division, and Anthony Hurley, a former assistant controller of Enterasys - have already pleaded guilty to either conspiracy or wire fraud in connection with the Ariel deal.

Enterasys was the main spin-off firm of Cabletron Systems in 2001. The company was co-founded by New Hampshire Governor Craig Benson before he went into politics. Benson is not accused of any wrongdoing. ®

Related stories

Cisco dominates declining router market
EMEA data networking sales hold firm
Enterasys slashes headcount by 30%
The great Enterasys boardroom exodus
Enterasys faces SEC probe

Providing a secure and efficient Helpdesk

More from The Register

next story
Facebook pays INFINITELY MORE UK corp tax than in 2012
Thanks for the £3k, Zuck. Doh! you're IN CREDIT. Guess not
Facebook, Apple: LADIES! Why not FREEZE your EGGS? It's on the company!
No biological clockwatching when you work in Silicon Valley
Happiness economics is bollocks. Oh, UK.gov just adopted it? Er ...
Opportunity doesn't knock; it costs us instead
Sysadmin with EBOLA? Gartner's issued advice to debug your biz
Start hoarding cleaning supplies, analyst firm says, and assume your team will scatter
YARR! Pirates walk the plank: DMCA magnets sink in Google results
Spaffing copyrighted stuff over the web? No search ranking for you
Microsoft EU warns: If you have ties to the US, Feds can get your data
European corps can't afford to get complacent while American Big Biz battles Uncle Sam
Don't bother telling people if you lose their data, say Euro bods
You read that right – with the proviso that it's encrypted
prev story

Whitepapers

Cloud and hybrid-cloud data protection for VMware
Learn how quick and easy it is to configure backups and perform restores for VMware environments.
A strategic approach to identity relationship management
ForgeRock commissioned Forrester to evaluate companies’ IAM practices and requirements when it comes to customer-facing scenarios versus employee-facing ones.
High Performance for All
While HPC is not new, it has traditionally been seen as a specialist area – is it now geared up to meet more mainstream requirements?
Three 1TB solid state scorchers up for grabs
Big SSDs can be expensive but think big and think free because you could be the lucky winner of one of three 1TB Samsung SSD 840 EVO drives that we’re giving away worth over £300 apiece.
Security for virtualized datacentres
Legacy security solutions are inefficient due to the architectural differences between physical and virtual environments.