Canopy Financial co-founder and former Chief Technology Officer Anthony Banas has agreed to plead guilty to wire fraud in a scheme to defraud investors of the company, which provided financial services software for banks and health plans administering health savings accounts.
Canopy Financial exec to plead guilty to wire fraud
Banas admits in an agreement with the U.S. attorney's office in Chicago that he and Canopy co-founder and CEO Jeremy Blackburn fabricated revenue, profitability and account data in connection with selling shares for $75 million in July and August 2009, and that they falsely told investors that the financial statements had been audited by KPMG. Banas admits he relayed bank statements he knew were phony to Spectrum Equity Investors, a group that bought the bulk of the shares in the fraudulent offerings.
Also, according to the agreement with Banas, he and Blackburn misappropriated about $18 million from client funds held in custodial accounts, including $300,000 Banas invested in a nightclub, and then lied about the account balances and interest earned. Banas faces a maximum sentence of 20 years in prison.
The Securities and Exchange Commission brought a civil fraud complaint against Blackburn and Canopy, which is pending in U.S. District Court in Chicago.
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