Geoffrey S. Berman, the United States Attorney for the Southern District of New York, announced today that ELIZABETH ANN PIERCE, the former chief executive officer (“CEO”) of Quintillion, a telecommunications company in Alaska, was sentenced today in Manhattan federal court to 60 months in prison for defrauding investors in New York of more than $270 million during her time as CEO.  PIERCE previously pled guilty before U.S. District Judge Edgardo Ramos, who imposed today’s sentence.

U.S. Attorney Geoffrey S. Berman said:  “Elizabeth Ann Pierce, the then-CEO of Quintillion, placed her ambition above the law.  In order to raise over $270 million to build a fiber optic cable system in northern Alaska, she repeatedly lied to her investors and forged the signatures of her customers’ executives on fake revenue contracts.  When her scheme started to unravel, she tried to delay exposure with yet more lies and forged documents.  She will now serve five years in prison for her crime.”

According to the Complaint, the Indictment, statements made in court, and publicly available documents:

Until July 2017, PIERCE was the chief executive officer of Quintillion, a telecommunications company based in Anchorage, Alaska, that built, operates, and markets a high-speed fiber optic cable system (the “Quintillion System”).  The Quintillion 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 fibers that connects the subsea and terrestrial segments.  The Quintillion 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 New York-based investment companies to provide more than $270 million to construct the Quintillion System by providing them with eight forged broadband capacity sales contracts and related order forms under which Quintillion would obtain guaranteed revenue once the Quintillion System was built (the “Fake Revenue Agreements”).  Under the Fake Revenue Agreements, four telecommunications services companies appeared to have made binding commitments to purchase specific wholesale quantities of capacity from Quintillion at specified prices.  The cumulative value of the Fake Revenue Agreements was approximately $1 billion over the life of the Fake Revenue Agreements.  In reality, 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 falsified versions of genuine revenue agreements.  PIERCE fabricated the terms of the false versions of the agreements to make them more favorable to Quintillion and, therefore, more appealing to investors than the genuine agreements.  For example, under one of the Fake Revenue Agreements, the customer purportedly agreed to buy from Quintillion increasing quantities of gigabits per second of capacity over a period of 20 years.  That agreement, if genuine, would have assured Quintillion hundreds of millions of dollars in future revenue.  In reality, negotiations over that deal had ended unsuccessfully, a fact that PIERCE never disclosed to the investors.  Under another Fake Revenue Agreement, the customer purportedly agreed to buy a fixed, predetermined amount of capacity from Quintillion regardless of subsequent market conditions.  In truth, that customer was not obligated to buy any capacity.

Over the course of the scheme, PIERCE tried to cover up her fraud, by continuing to negotiate with the telecommunications companies in hopes of reaching agreements identical to the ones she forged.  Her efforts were mostly unsuccessful.  PIERCE completely failed to secure any revenue contract with one of those telecommunications companies, and the agreements she reached with the other three companies contained less favorable terms for Quintillion than the Fake Revenue Agreements, such as a smaller mandatory capacity purchase commitment, or no commitment at all.  PIERCE hid these genuine, but inferior, contracts from the investment companies and her own staff.  When Quintillion and the investment companies ultimately discovered the fraud in mid-2017, they learned that the real contracts PIERCE actually negotiated would generate only a fraction of the anticipated guaranteed revenue of the Fake Revenue Agreements she forged.

As part of PIERCE’s overall scheme, she also swindled two individual investors (together, the “Individual Victims”) out of a total of $365,000.  PIERCE led these individuals to believe that they would acquire ownership interests in Quintillion when, in fact, she used half of one victim’s money and all of the other victim’s investment for her own personal benefit.  These individuals have received no shares and none of their money back from PIERCE.

After the terrestrial system was built, PIERCE attempted to prevent the discovery of the Fake Revenue Agreements by accelerating the timing of incoming payments under certain genuine agreements to make those payments appear to be based on the Fake Revenue Agreements.  PIERCE also sought to prevent Quintillion from invoicing one of the customers that had no real contract with Quintillion by fabricating email correspondence that gave the impression she was terminating a contractual relationship, when in fact no such relationship existed.  PIERCE’s scheme started to unravel when another customer disputed invoices that it received from Quintillion pursuant to one of the Fake Revenue Agreements.  Shortly thereafter, in the midst of Quintillion’s internal investigation, PIERCE abruptly resigned.  Quintillion self-reported PIERCE’s conduct to the Department of Justice.

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In addition to her term of imprisonment, PIERCE, age 55, now of Austin, Texas, was sentenced to three years of supervised release, and was ordered to forfeit $896,698.00 and all of her interests in Quintillion and a property in Texas.  PIERCE will also be subject to a restitution order to her victims to be entered at a later date.

Mr. Berman praised the outstanding work of the Federal Bureau of Investigation.

This case is prosecuted by the Office’s Complex Frauds and Cybercrime Unit.  Assistant U.S. Attorneys Sarah Lai and Vladislav Vainberg are in charge of the prosecution.  

Geoffrey S. Berman, the United States Attorney for the Southern District of New York, announced that ELIZABETH ANN PIERCE, the former Chief Executive Officer of a telecommunications company based in Anchorage, Alaska, pled guilty today in Manhattan federal court to wire fraud and aggravated identity theft in connection with a scheme to use forged guaranteed revenue contracts fraudulently to induce investors to invest more than $250 million into her company for the construction of a fiber optic cable network in Alaska.  PIERCE pled guilty before U.S. District Judge Edgardo Ramos.

Manhattan U.S. Attorney Geoffrey S. Berman said:  “As she admitted today, Elizabeth Ann Pierce engaged in a brazen, multi-year scheme to obtain over $250 million from investors by misrepresenting that she had guaranteed revenue contracts with multiple telecommunications services companies.  But in fact, the defendant faked those contracts, forged other people’s signatures on them, and then lied to cover up her fraud.  She abused her executive position and is now being held accountable for her crimes.” 

According to the Complaint, the Indictment, statements made in court, and publicly available documents:

Until July 2017, PIERCE was the chief executive officer of Quintillion, a telecommunications company based in Anchorage, Alaska that built, operates, and markets a high-speed fiber optic cable system (the “Fiber Optic Cable System”).  This 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 fibers that connects the subsea and terrestrial segments.  The Fiber Optic Cable 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 provide more than $250 million to construct the Fiber Optic Cable System by providing them with eight forged broadband capacity sales contracts and related order forms under which Quintillion would obtain guaranteed revenue once the Fiber Optic Cable System was built (the “Fake Revenue Agreements”).  Under the Fake Revenue Agreements, four telecommunications services companies appeared to have made binding commitments to purchase specific wholesale quantities of capacity from Quintillion at specified 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 Fake Revenue Agreements.  In reality, 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 falsified versions of genuine revenue agreements.  PIERCE fabricated the terms of the false versions of the agreements to make them more favorable to Quintillion and, therefore, more appealing to investors than the genuine agreements.  For example, under one of the Fake Revenue Agreements, the customer purportedly agreed to buy increasing amounts of gigabits per second of capacity over a period of 20 years from Quintillion.  That agreement, if genuine, would have assured Quintillion hundreds of millions of dollars in future revenue.  In reality, negotiations over that deal had ended unsuccessfully, which fact PIERCE never disclosed to the investors.  Under another Fake Revenue Agreement, the customer purportedly agreed to buy a fixed, predetermined amount of capacity from Quintillion regardless of subsequent market conditions.  In truth, that customer was not obligated to buy any capacity.

After the terrestrial system was built, PIERCE attempted to prevent the discovery of the Fake Revenue Agreements by accelerating the timing of incoming payments under certain genuine agreements to make those payments appear to be based on the Fake Revenue Agreements.  PIERCE also sought to prevent Quintillion and the investors from invoicing one of the customers that had no real contract with Quintillion by fabricating e-mail correspondence PIERCE purportedly had with that customer.  PIERCE’s scheme started to unravel when a customer disputed invoices that it received from Quintillion pursuant to one of the Fake Revenue Agreements.  Shortly thereafter, in the midst of Quintillion’s internal investigation, PIERCE abruptly resigned.  Quintillion self-reported PIERCE’s conduct to the Department of Justice.

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PIERCE, age 55, now of Austin, Texas, pled guilty to one count of wire fraud, which carries a maximum sentence of 20 years in prison, and eight counts of aggravated identity theft, each of which carries a mandatory 2-year term of imprisonment, of which at least 2 years must be consecutive to any term of imprisonment imposed on the wire fraud count.

PIERCE is scheduled to be sentenced by U.S. District Judge Edgardo Ramos on May 16, 2019, at 11:00 a.m.

The maximum potential sentences in this case are prescribed by Congress and are provided here for informational purposes only, as any sentencing of the defendant will be determined by the judge. 

Mr. Berman praised the outstanding investigative work of the Federal Bureau of Investigation.

The prosecution of this case is being handled by the Office’s Complex Frauds and Cybercrime Unit.  Assistant U.S. Attorneys Sarah Lai and Vladislav Vainberg are in charge of the prosecution.