Irishman indicted by grand jury for fraud
A federal grand jury has indicted an Irish businessman on charges of falsely boosting a US computer corporation's stock price.
The FBI alleges that Jerry A. Shanahan (40), formerly of Rochester, New Hampshire and the former chief operating officer for Enterasys Networks Inc, set up secret deals to let the corporation claim millions of dollars in false revenue.
His lawyer, Andrew Good, said yesterday that Mr Shanahan denied the 16 charges of conspiracy, mail fraud and wire fraud and would be travelling voluntarily from Ireland to stand trial.
Mr Good said he could not comment on Mr Shanahan's whereabouts in Ireland.
The corporation employs about 1,700 people worldwide, including about 80 at Shannon Industrial Estate in Co Clare.
There was a sharp decline in the corporation's share price in 2002, when the US Security and Exchange Commission (SEC) announced that it was investigating Enterasys' operations.
Mr Shanahan, who has a degree in Electrical Engineering from University College Cork and a master's in Business from the University of Limerick, has been indicted along with another former executive, Robert Barber of Durham, Massachusetts. The former chief financial officer, Robert Gagalis and former finance executive Bruce Kay of Yarmouth, Maine, have already been indicted on similar charges.
The indictments charge the four with recording nearly $7 million in revenue where they allegedly gave customers' money to buy Enterasys products, in an effort to shore up profits and the corporation's share price.
They are accused of using third party corporations to hide the transactions.
Mr Shanahan is also charged of organising another deal in which the corporation would falsely show an additional $3 million in revenue.
The four are charged with conspiracy, as well as making false statements to the SEC, to auditors and in news releases.
Nine former executives at the corporation have now been charged with various offences and four have pleaded guilty.
Mr Shanahan was appointed chief operating officer of the Andover, Massachusetts corporation in 2001 but resigned with three executives the following year, after the SEC announced its investigation and the share price plunged. He returned to Ireland immediately.
William Morse, spokesman for the US Attorney's Office in New Hampshire, said the wire and mail fraud charges carry a maximum five-year prison term pre- count and the securities fraud charges carry a maximum 10 year sentence.
The case is being taken by President Bush's Corporate Fraud Task Force. The FBI investigated the case along with the US Postal Inspection Service, which intercepted mail allegedly used for the scheme.