QUINTILLION’S TIES RAN THROUGH GOV. WALKER’S OFFICE
A company that has laid fiber optic cable along the ocean bottom from Nome to Deadhorse now has its former chief executive officer arrested and charged with defrauding investment companies.
Quintillion already faced a lawsuit by ACS Cable Systems LLC, which filed complaints in December about how Quintillion had fraudulently or negligently induced ACS into executing a contract.
That lawsuit has now led to federal charges against former CEO Elizabeth Pierce.
The original lawsuit said that Quintillion advised ACS that Pierce did not have the authority to execute an agreement, and that the two companies had different copies of the agreement. Quintillion’s version of the subsea agreement did not include resale rights. One of the documents was forged, the company said.
Evidently, ACS wasn’t the only one that was upset about the deals with Quintillion. Pierce has surrendered to authorities in New York and been charged.
[Read the Dept. of Justice Case against Pierce here]
WALKER’S CONNECTION TO QUINTILLION
On Aug. 8, 2016, Gov. Bill Walker appeared in Dutch Harbor to review the work being done by Quintillion as it completed the Alaska portion of the cable project. Walker declared it a win for Alaska.
“Alaska is changing,” he told KUAC radio. “Alaska is changing because the Arctic is opening up. So to be able to have this opportunity for Alaska — the connectivity with the rest of the world with the high-speed internet this is going to provide — it’s pretty exciting.”
Two days later, at the board meeting for the Alaska Industrial and Development Export Authority, who should show up but the governor’s deputy chief of staff, Marcia Davis, sitting alongside Quintillion’s Elizabeth Pierce.
At the end of that meeting, the board went into executive session to discuss the financing of telecommunications in Alaska.
Marcia Davis, it’s known, steered an investment by Calista Corporation to Quintillion when she was Calista’s general counsel.
She is the same Marcia Davis who ran the equivalent of a money-laundering operation for a political action committee that worked to get Walker elected, and then she became his deputy chief of staff.
Must Read Alaska wrote last year, “If AIDEA is getting ready to make a decision about financing a portion of this project, then the public will want to know a lot more about it because it’s an unusual piece of investment with an uncertain outcome… Word is that Quintillion needs an answer right away from AIDEA, and that in itself might signal it’s best to slow down.”
Not long after, Pierce was quickly removed from her post and replaced.
Quintillion CEO out, new one in, as project nears completion
“The version of the Agreement that does not contain the Exclusive Resale Right is not genuine and is a forgery,” the lawsuit by ACS claims.
Today, U.S. Attorney Geoffrey S. Berman said in a statement:
“To realize her plan to build a fiber optic system that would service Alaska and connect it to the lower 48 states, Elizabeth Ann Pierce allegedly convinced two investment companies that she had secured signed contracts that would supposedly generate hundreds of millions of dollars in guaranteed future revenue from the system. 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.”
“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 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,” Assistant Director William F. Sweeney said.
According to the allegations contained in the Complaint unsealed today in Manhattan Federal Court:
“PIERCE was the chief executive officer of a telecommunications company based in Anchorage, Alaska (the “Fiber Optic Company”), that built, operates, and markets a high-speed fiber optic cable system. The system consists of three segments: a subsea segment that spans the Alaskan Arctic; a terrestrial segment that runs north to south along the Dalton Highway; and a land-based network of pre-existing fibers that connects the subsea and terrestrial segments that the Fiber Optic Company wholly or jointly owns or controls with another telecommunications company. The Fiber Optic System is connected to the lower 48 states through other existing networks.
Between May 2015, and July 2017, PIERCE engaged in a scheme to induce two investment companies to invest more than $250 million in the Fiber Optic System by providing them with forged broadband capacity sales contracts (the “Fake Revenue Agreements”). Under the Fake Revenue Agreements, the customers – other telecommunications companies that resell capacity to end users such as businesses and households – appeared to have made binding commitments to purchase specific wholesale quantities of bandwidth from the Fiber Optic Company at specific prices. The cumulative value of the Fake Revenue Agreements was more than $24 million during the first year of the subsea segment’s operation, approximately $10 million during the first year of the terrestrial segment’s operation, and approximately $1 billion over the life of the Agreements. In fact, the Fake Revenue Agreements were completely worthless because PIERCE had forged the counterparties’ signatures.
Certain of the Fake Revenue Agreements never existed at all, while others were false versions of genuine revenue agreements that were more favorable to the Fiber Optic Company than the genuine agreements. For example, under one of the Fake Revenue Agreements, the customer supposedly agreed to buy increasingly more gigabits per second of capacity over a period of 20 years from the Fiber Optic Company. That contract, if genuine, would have assured the Fiber Optic Company of hundreds of millions of dollars in future revenue. In reality, negotiations over that deal ended unsuccessfully, and PIERCE never disclosed that fact to the investors. Under another Fake Revenue Agreement, the customer had purportedly agreed to buy a fixed, predetermined amount of capacity regardless of subsequent market conditions. In actuality, that customer was not obligated to buy any capacity.
PIERCE’s scheme began unraveling when a customer disputed invoices that it received from the Fiber Optic Company pursuant to one of the Fake Revenue Agreements. Shortly thereafter, PIERCE abruptly resigned from the Fiber Optic Company.”
* * *
Pierce of Anchorage is charged with one count of wire fraud, which carries a maximum sentence of 20 years in prison.
The case is being prosecuted by the Office’s Complex Frauds and Cybercrime Unit.
Quintillion is owned by a Ukranian oligarch, Len Blavatnik. Here is Must Read Alaska’s original story from Aug. 2016, which raised questions about the entire business model and the governor’s involvement:
bill walker is in more messes than we know? I would give you a 10 to 1 odds on that.
Sleazy. Sleazy. Sleazy. Ms. Davis was also Walker’s first Commissioner of Revenue, leading the department until Hoffbeck was hired and therefore fiduciary in state law to about $30 billion in public funds. Remember, Beltrami, Begich and Botelho put this ticket together and then handed out the rewards when it won the election. Will further indictments reach state agencies? Does the Chi-com gas line windmill turn on a similarly crooked bearing? If so I think we rely upon MustReadAlaska to break the news and the rest of the Alaska media to slowly and grudgingly follow.
Suzzanne: the phase of the project that would traverse the Northwest Passage has not been built. Only the subsea portion from Nome to Deadhorse was deployed (along with the terrestrial portion along the Dalton Hwy. Thanks for the article!
Parts of this feel a lot like Governor Walker’s efforts to build a North Slope gas line. Former (or current) communists, “signed” agreements, “visionary” leaders, lots of State bureaucrats and, of course, Governor Walker himself. Great work, Bill; keep it up.
Suzanne: i believe a university (UA Statewide) employee(CEO) may have lost his job over this also. He had been put on administrative leave and the a day or two later resigned. He was a promoter of this project.
So how much did it cost Alaskans to do research into this program prior to walker agreeing to invest in them on a higher level. 1 million dollars? 2 million dollars? 10 million dollars? I would do the research but I have things to do today. If nobody answers I will start researching it on my own when I get the time. Point being that governor bill walker spends millions on researching things that always end up costing Alaskans billions of dollars only to end up with pricey scams like this atrocity. Bill walker thinks that he is invincible and unprosecutable. Let’s let him know the truth or do we have to wait for President Trump to do everything. Are Alaskans really that weak and uninformed or have we finally been so infiltrated by the left with illegals, refugees, cartels, killer dr.s, and lazy paid off reps that we are going to just give in to abominations like men in little girls restrooms. Follow the Q and wake the f up.
To be fair, Leonard Blavatnik is not a ‘Ukrainian oligarch.’ His family moved to the US in 1978 when he was 20. He is a well respected British-American businessman who is currently the wealthiest man in Great Britain and in the Top 50 worldwide. He’s no fly by night con artist.
Now that the portion from Dutch Harbor to Prudhoe is operational, the link to Japan will get installed this summer.
Always good to see that women are truly equal to men.
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