13 April 2018
| Alan Burkitt-Gray
The former CEO of Alaska fibre company Quintillion has been charged with $250 million fraud by pretending it had wholesale contracts worth $1 billion.
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
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
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
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
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
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."