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|Subject: Former Enterasys CEO Pleads Guilty||Date: 9/17/2004 10:42 AM|
|Author: zoningfool||Number: 515 of 532|
FOR IMMEDIATE RELEASE
WEDNESDAY, SEPTEMBER 15, 2004
TDD (202) 514-1888
FORMER CHIEF EXECUTIVE OFFICER OF ENTERASYS
NETWORK SYSTEMS, INC. PLEADS GUILTY IN FRAUD SCHEME
WASHINGTON, D.C. - Assistant Attorney General Christopher A. Wray of the Criminal Division and Acting United States Attorney Peter E. Papps for the District of New Hampshire announced today that the former chief executive officer of Enterasys Network Systems, Inc., a computer hardware and software corporation previously headquartered in Rochester, New Hampshire, has pleaded guilty to charges arising from a revenue recognition scheme.
Enrique “Henry” P. Fiallo, 52, of Hampton Falls, New Hampshire, entered his guilty plea this afternoon before Judge Steven J. McAuliffe at U.S. District Court in Concord, New Hampshire. Fiallo, the former CEO of Enterasys, pleaded guilty to a one-count criminal information charging him with conspiracy to commit mail, wire and securities fraud for his participation in a scheme to fraudulently inflate by over $20 million the amount of revenue Enterasys reported to its shareholders and the Securities and Exchange Commission for the quarter ended Sept. 1, 2001. Fiallo also entered into a cooperation agreement with the government.
The information alleges that Fiallo and his co-conspirators caused Enterasys to fraudulently and improperly recognize approximately $20 million in revenue on its books and records during the quarter ending Sept. 1, 2001. The co-conspirators allegedly caused Enterasys to mislead the investing public and the SEC by falsely claiming that it had met or exceeded previously announced revenue targets and the published expectations of Wall Street analysts.
Fiallo admits that he and his co-conspirators used Enterasys funds to secretly purchase revenue by “investing” those funds in “investee” companies in return for the purchase of Enterasys products with those same fund