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The parade of indicted general counsel continues. In July, David Klarman, the ex-GC of U.S. Wireless Corporation, became the latest in-house lawyer to get hauled into court. He follows the not-so-illustrious path of Mark Belnick (Tyco International Ltd.), Franklin Brown (Rite Aid Corporation), and Jay Lapine (HBO & Co.). Federal authorities arrested Klarman at his home in New York after he was indicted for securities fraud. He is expected to be transferred to San Francisco to face charges alongside the former CEO of U.S. Wireless, Oliver Hilsenrath, whom authorities are seeking to extradite from Israel. The U.S. attorney’s office in San Francisco charges that both executives schemed to transfer company assets to shell corporations in the Virgin Islands. Hilsenrath and Klarman were forced out of U.S. Wireless when the alleged fraud was uncovered in 2001. As a result, the San Ramon, California-based company restated its financial reports and filed for bankruptcy. Both men are charged with three counts of securities fraud. Hilsenrath faces an additional 33 counts of wire fraud, while Klarman faces 16 counts of wire fraud. Klarman’s lawyer, Edward Swanson of San Francisco’s Swanson & McNamara, did not respond to requests for comment. Hilsenrath’s counsel could not be identified. Klarman and Hilsenrath must also contend with a Securities and Exchange Commission suit that alleges they stashed $3.2 million in company stock and stock options and $428,000 in cash in offshore entities. Initially, it was an auditor’s questions about a transaction that led to an investigation by the board of U.S. Wireless and, eventually, the dissolution of the company. Nasdaq delisted U.S. Wireless shortly after the revelation of Hilsenrath and Klarman’s alleged misconduct, and its assets were eventually sold to Trafficmaster USA Inc. In a statement, deputy attorney general Larry Thompson said, “The Department of Justice remains committed to identifying and prosecuting those corporate executives who use the company’s coffers as their own.”

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