Former Entellium CFO pleads guilty in fraud

Former Entellium financial officer Parrish L. Jones pleaded guilty Wednesday to one count of wire fraud in U.S. District Court in Seattle, 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 prison 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 continued until the two executives resigned Sept. 30, according to the plea agreements 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 largest backers, ultimately investing $19 million and occupying seats on the Entellium board.

In March, Jones and Johnston presented the false figures to a board meeting; a month later Ignition invested $2 million in the company.

Lawyers for both sides agreed to use the amount of money Jones gained from the fraud as the amount of loss, and the restitution he pays.

Based on Jones' salary, bonus and credit-card charges, that gain was about $865,000, according to the plea deal.

Jones, free on bond, appeared with lawyer Jeffrey Robinson of Schroeter Goldmark & Bender. "I plead guilty, your honor," he said.

He smiled slightly after the hearing but both 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 range of 33 to 41 months.

Sentencing is set for March 13 before U.S. District Judge Richard A. Jones. Johnston, who pleaded guilty last week, is also scheduled for sentencing that day.

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