CEO of Alaskan telco jailed for US$1 billion fraud

• Elizabeth Pierce, former FCC advisor, gets 5 years
• She forged contracts "proving" four telcos had signed to buy wholesale capacity
• Conned investors out of $270 million
• The fraud discovered, she went on the lam but nabbed by the G-Men

Most people will have heard of the fabled Alaska Highway, the route constructed during World War II to connect the contiguous United States to Alaska across Canada. It starts at Dawson Creek, British Columbia, and runs to Delta Junction, Alaska, via Whitehorse in the Yukon. The road, which is now fully paved but subject to an endless cycle for erosion and repair is 1,387 miles long. It's a spectacular route but can be a lonely and daunting drive. I can attest to that having driven a good part of it.

Then there's the Alaska Fibre-highway, which, for more than two years was little more than construct that allowed Elizabeth Pierce, (55) the erstwhile and criminal CEO of the Anchorage, Alaskan-headquartered telco, Quintillion Communications, to defraud New York investors of more than US$270 million. Eventually pleading guilty to a US$ 1 billion scam, Pierce has just been sentenced to five years in jail (plus three years of extended supervisory probation once she has done her time in the slammer, the confiscation of property and a fine of just shy of a million bucks) in the Manhattan federal court.

Prosecuting Attorney Geoffrey Berman said the case was simple enough; "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".

Quintillion itself a telecommunications company builds, operates and markets a high-speed fibre optic cable system, the "Quintillion System", a tripartite network comprising a submarine cable around the Alaskan Arctic, a ground-laid section that runs north to south along the Dalton Highway and fibre sections that connect the submarine and terrestrial parts of the network. It is connected to the lower 48 United States via other existing networks.

The nub of the court case was that, between May 2015 and July 2017,  Elizabeth Pierce conducted a criminal scam that totalled a cumulative value of $1 billion, to con two New York investment companies to stump-up in excess of $270 million to construct the Quintillion System. She did so by forging eight separate broadband capacity sales contracts (plus associated supporting documentation such as order forms and emails). 

The forged revenue agreements made out that four telcos had signed binding contracts (some lasting for 20 years!) to buy wholesale capacity at specific prices thus guaranteeing Quintillion a huge and ongoing profit. Unsurprisingly the forged documents weren't worth the paper they were printed on. Once the scam was in place, Pierce subsequently attempted to negotiate identical deals to the fake ones with the telcos she had conned. The strategy didn't work so the CEO simply hid everything from her company, its staff and board of directors - and she got away with it for more than two years! 

Is she contrite? Dunno, Alaska

An even more egregious part of the fraud was that Pierce personally swindled two individual investors out of $365,000 by promising that they would become senior stock-holders in Quintillion. What she actually did was to use the money to fund her own lavish lifestyle, while those swindled got no company shares or any of their money back. 

When the fraud was finally discovered Pierce abruptly resigned, disappeared from the scene and the FBI eventually tracked her down in Texas. Meanwhile, Quintillion reported itself and Pierce to the US Department of Justice. Pierce, a sometime senior advisor to Ajit Pai, the Chairman of the Federal Communications Commission (FCC) was duly charged with wire fraud (a federal offence) and eight counts of aggravated identity theft. 

Mr. Pai nominated her to be one of two Chairpersons of the FCC's Broadband Deployment Advisory Committee where she was in charge of expanding broadband access by "reducing and removing regulatory barriers to infrastructure investment". How ironic is that? But, let's face it, she was very good at getting around them herself - for a while anyway. On social media Elizabeth Pierce currently describes herself as "semi-retired". Perhaps that will now change to "jailbird", but I wouldn't bet on it.

And now, to finish with a flourish, here is a well-worn (but possibly true) local joke. Apart from the snow, ice, bears, elk and mosquitos you know you are in Alaska because your monthly Internet bill is twice as much as your mortgage.