X

Thank you for sharing!

Your article was successfully shared with the contacts you provided.
Federal authorities Monday arrested David Klarman, the former general counsel of San Ramon, Calif.-based U.S. Wireless, 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 U.S. Wireless’ former CEO, Oliver Hilsenrath, whom authorities are seeking to extradite from Israel. Both are charged in an alleged scheme uncovered in 2001 where the two men transferred company assets to shell corporations in the Virgin Islands that they controlled. Hilsenrath and Klarman were forced out of the company when the alleged fraud was announced. As a result, the company restated its financial reports and filed for bankruptcy. Klarman joins former HBO & Co. General Counsel Jay Lapine, indicted as part of a federal case involving the merger of HBO & Co. and McKesson Corp., as one of the few corporate lawyers ever to face a federal fraud indictment. Klarman’s California Bar membership has been inactive since around the time the fraud was revealed by the company. Both men face three counts of securities fraud. Hilsenrath faces 33 counts of wire fraud, while Klarman faces 16 counts of wire fraud. Klarman’s lawyer, Swanson & McNamara attorney Edward Swanson, could not be reached for comment. In addition to Monday’s indictment, the Securities and Exchange Commission also filed suit against the two men. According to the complaint, the pair secreted $3.2 million in company stock and stock options and $428,000 in cash in offshore entities. The SEC also alleges that the two men misled the company’s outside auditors. It was an auditor’s questioning of a transaction that led to an investigation by U.S. Wireless’ board of directors and eventually the dissolution of the company. Nasdaq delisted U.S. Wireless shortly after the revelation, and its assets were eventually sold to Trafficmaster USA Inc. “Today’s indictment alleges that the defendants betrayed the trust of U.S. Wireless shareholders by using the company’s money for their own personal gain,” Deputy Attorney General Larry Thompson said in a statement. “The Department of Justice remains committed to identifying and prosecuting those corporate executives who use the company’s coffers as their own.”

This content has been archived. It is available exclusively through our partner LexisNexis®.

To view this content, please continue to Lexis Advance®.

Not a Lexis Advance® Subscriber? Subscribe Now

Why am I seeing this?

LexisNexis® is now the exclusive third party online distributor of the broad collection of current and archived versions of ALM's legal news publications. LexisNexis® customers will be able to access and use ALM's content by subscribing to the LexisNexis® services via Lexis Advance®. This includes content from the National Law Journal®, The American Lawyer®, Law Technology News®, The New York Law Journal® and Corporate Counsel®, as well as ALM's other newspapers, directories, legal treatises, published and unpublished court opinions, and other sources of legal information.

ALM's content plays a significant role in your work and research, and now through this alliance LexisNexis® will bring you access to an even more comprehensive collection of legal content.

For questions call 1-877-256-2472 or contact us at [email protected]

 
 

ALM Legal Publication Newsletters

Sign Up Today and Never Miss Another Story.

As part of your digital membership, you can sign up for an unlimited number of a wide range of complimentary newsletters. Visit your My Account page to make your selections. Get the timely legal news and critical analysis you cannot afford to miss. Tailored just for you. In your inbox. Every day.

Copyright © 2020 ALM Media Properties, LLC. All Rights Reserved.