PETALING JAYA: Two top executives of an MSC Malaysia-listed company have been arrested for allegedly overstating the company’s revenue to attract more funding interest, according to US media reports.
Entellium Corp began operations in Kuala Lumpur in 2000 before spreading its wings to Seattle, Washington, although it maintains its operations in Malaysia. It received MSC Malaysia status last year.
US media reports stated that former chief executive Paul Johnston and former chief financial officer Parris Jones are accused of overstating revenue by more than 400% over the last three years.
The duo allegedly inflated 2007 revenue from US$1.74mil (RM6.09mil) to US$5.22mil (RM18.27mil).
Johnston and Jones were arrested last Tuesday and arraigned on Wednesday (Oct 8).
A US District Court complaint alleges that the pair lied about the financial state of their company to attract more than US$50mil in investment between March 2004 and September 2008, trade magazine InformationWeek reported.
Specialising in Customer Relationship Management (CRM) software, Entellium recently laid off 50 of its 68 employees at its Seattle headquarters.
Malaysia Venture Capital Management Bhd (Mavcap), a subsidiary of the Finance Ministry, invested RM7mil in the company in June, according to Husni Salleh, its chief executive officer.
“The matter is still being investigated, but everybody is shocked by this,” he said.
Entellium also received an RM7.5mil R&D grant from Multimedia Development Corporation (MDeC), the caretaker of MSC Malaysia.
Venture capital firm Ignition Partners (www.ignitionpartners. com) provided Entellium with funds that enabled it to sell and market its services in the United States.
It was once named by respected trade publication CRM Magazine as “The One to Watch” in the US customer relationship management (CRM) market leader awards for 2004.
Entellium also has its R&D operations at the Petronas Twin Towers. Company officials there could not be contacted for comment.
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