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PhillyPA65   Saturday, 06/08/13 07:36:28 PM
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San Francisco Chronicle

Ex-Pegasus CEO gets 21-year sentence for fraud

Bob Egelko, Staff writer, begelko@sfchronicle.com

Thursday, June 7, 2012

The former chief executive of Pegasus Wireless Corp. was sentenced Thursday to 21 years in federal prison - nearly three times as long as the term sought by prosecutors - for a multimillion-dollar stock fraud that led to the bankruptcy of the Fremont technology company.

U.S. District Judge Jeffrey White of San Francisco told Jasper Knabb he had caused "unspeakable ... misery" to investors who had lost their life savings. White said Knabb had concealed his funds and might commit new frauds "if given the opportunity." He ordered Knabb jailed immediately after the hearing.

The Securities and Exchange Commission has ordered Knabb to repay $40.8 million that he allegedly reaped from stock sales. Prosecutors acknowledged in a court filing that Knabb would be unable to make that payment.

Knabb, 46, pleaded guilty in July to securities fraud and conspiracy. Pegasus' former chief financial officer, Stephen Durland, pleaded guilty to similar charges in March 2011 and was sentenced by White in October to two years and nine months in prison. Prosecutors said Durland made $2.1 million from fraudulent stock sales.

Starting in 2005, when Pegasus was founded, prosecutors said, Knabb and Durland issued nearly half a billion shares to friends and associates to pay off a fictitious company debt, then pocketed the proceeds when the shares were sold for inflated prices.

When the scheme came to light, the stock price fell from more than $18 per share to less than $1 in four months. Pegasus filed for bankruptcy in 2008 and has relocated to Florida.

Prosecutors sought a sentence of seven years and three months, the maximum recommended by federal guidelines, saying they were bound by their plea agreement with Knabb, and credited him for admitting his guilt. Defense lawyers asked for three years and four months, saying Knabb had fully accepted responsibility and was not concealing his assets.

But White said the court's probation office had found that Knabb had hidden assets and could not be trusted. "His instinct has always been to lie and cheat," the judge said.

Source: http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2012/06/07/BUSG1OUITK.DTL

Inmate Locator: http://www.bop.gov/iloc2/LocateInmate.jsp

Register No: 16044-111
Age-Race-Sex: 46-White-M
Release Date (Projected): 10-18-2030

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