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The list of indicted GCs just keeps getting longer. This time the dubious distinction goes to Bruce Hill, the former chief legal officer of Inso Corporation, a now defunct Boston-based software company. Federal prosecutors claim that Hill crafted a bogus deal at Inso six years ago, and then lied about it to government investigators. In May the U.S. attorney’s office in Boston indicted Hill, 40, on nine counts, including securities fraud, wire fraud, false statements to corporate accountants, and perjury. If convicted, he could face penalties ranging from five to 20 years in prison on each count, and fines up to $1 million. According to the government’s complaint, in September 1998 Hill and Graham Marshall � a former Inso vice president � got a Malaysian business to sign a $3 million purchase order with assurances that Inso would actually sell the software to another customer. When the sale to the other customer fell through, Hill arranged for Inso to provide the Malaysian outfit with $4 million in letters of credit. The Malaysian firm � a shell company headed by a local acquaintance of Marshall’s � then paid Inso $3 million from the letters of credit, even though no merchandise changed hands. Inso reported the sale, which represented roughly 15 percent of its quarterly earnings and enabled the company to meet its projected earnings forecasts. Hill’s attorney, Boston solo practitioner Richard Egbert, did not respond to a request for comment. Marshall could not be reached for comment. A spokeswoman for the U.S. attorney’s office said it would not discuss the case. The perjury charge against Hill stems from his testimony before the Securities and Exchange Commission, which launched an investigation after the company announced in January 1999 that it would need to restate its revenues for the previous year. The company’s stock tanked after it announced the restatements, a blow from which it never recovered. It went out of business in May 2002. One white-collar-crime expert says that Hill’s alleged perjury may have prompted the government’s latest move. “This is certainly consistent with many white-collar matters that become criminal matters, not because of what people did, but because of what they do when they are investigated for what they did,” says Alan Vinegrad. A former U.S. attorney for the Eastern District of New York, Vinegrad is now a partner with Covington & Burling in New York. “It’s basically the same lesson you can learn from the Arthur Andersen, Martha Stewart, and Frank Quattrone cases,” Vinegrad adds. In each case, prosecutors charged that there was an attempt to thwart a government probe. In addition to the criminal indictment, Hill is facing a related SEC lawsuit filed in 2002. The SEC is seeking permanent injunctions against Hill and Marshall; fines; reimbursement for the personal losses they avoided by selling shares at the same time they were allegedly defrauding the company; and an order barring them from serving as officers or directors of any other public company. Hill is the third Inso executive to face criminal fraud charges. Marshall was indicted in November 2003. Inso vice president Richard Vatcher pled guilty to securities law violations in September 2003 for another alleged scheme. In that case, Vatcher obtained sales orders from at least six foreign customers by granting side agreements allowing them to kill the deals later on.

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