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Originally published December 17, 2008 at 1:28 PM | Page modified December 18, 2008 at 8:33 AM

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Ex-Entellium financial officer pleads guilty to fraud

Former Entellium financial officer Parrish L. Jones pleaded guilty to one count of wire fraud in U.S. District Court today, admitting to falsely inflating company revenues in a scheme to deceive investors over four years.

Seattle Times business reporter

Former Entellium financial officer Parrish L. Jones pleaded guilty to one count of wire fraud in U.S. District Court today, admitting to falsely inflating company revenues in a scheme to deceive investors over four years.

The agreement with federal prosecutors means Jones will likely face a sentence of 2 ½ to 3 ½ years, according to prosecutors, although the sentencing decision is up to the judge.

Jones and former Entellium Chief Executive Paul Johnston admitted to creating a scheme to lure investors by inflating revenue figures many times more than their actual numbers. They kept a separate set of books, which they presented at board meetings.

The scheme dated back to March 2004, shortly after the company was incorporated in Seattle, and went on until the executives' resignations Sept. 30, according to the plea agreements that both men signed.

Based partly on the inflated figures, investors poured more than $50 million into Entellium, which sells customer-relationship-management software.

Bellevue-based Ignition Partners became one of the company's largest backers, ultimately investing $19 million in Entellium and occupying seats on its board. In March, Jones and Johnston presented the false figures to a board meeting, and a month later Ignition invested $2 million in the company.

Attorneys for both sides agreed to use the amount of money Jones gained from the fraud as the amount of loss, and the restitution he must pay back. Based on Jones' salary, bonus and credit card charges, that gain was about $865,000, according to the plea deal.

Jones, who is free on bond, appeared with his attorney, Jeffrey Robinson of Schroeter Goldmark & Bender. "I plead guilty, your honor," Jones said. He smiled slightly after the hearing, but he and his attorney declined to comment.

Assistant U.S. Attorney Carl Blackstone will argue that Jones' sentence should reflect an abuse of trust, which Robinson has contested. If the judge decides not to include the abuse of trust, the sentence could be shorter than the expected 33 to 41 months range.

Sentencing is set for March 13 before U.S. District Judge Richard A. Jones.

Kristi Heim: 206-464-2718 or kheim@seattletimes.com

Copyright © 2008 The Seattle Times Company

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