Opinion ID: 205320
Heading Depth: 2
Heading Rank: 1

Heading: The Events Underlying the Counts of Conviction

Text: In August 2007, Skys, whose real name is Eric Smith, launched a scheme to obtain large sums of money from several financial institutions. He held himself out to be the president and chief executive officer of a company he called Kaiser-Himmel Corp. (Kaiser-Himmel or K-H), which was supposedly in the business of providing information technology consulting services He approached Citigroup Inc. (Citigroup) and represented that Kaiser-Himmel owned approximately 13.4 million shares of stock in Sprint Nextel Corp. (Sprint) that K-H had received as payment for an anti-virus computer program called Aedan, which K-H had supposedly developed and which involved the use of artificial intelligence. At that time, the market value of 13.4 million shares of Sprint was approximately $240 million. Skys represented that K-H's Sprint shares were restricted, i.e., they could not legally be transferred until October 2008, and he sought to realize immediate cash for about one-third of the shares by a means such as pledging them to Citigroup in exchange for a loanor an advance purchase priceof $83 million that would be repaid either in cash or by transferring the hypothecated shares. In fact, neither Skys nor K-H owned any Sprint stock, and all of the documents that Skys submitted to Citigroup as evidence of ownership were fabricated. Citigroup seriously considered the proposed transaction but declined in October 2007, after it contacted Sprint and learned that Skys's claims were false and his documents were forgeries. Skys made similar attempts to obtain funds from three other financial institutions, using some of the same forged documents. Those attempts also failed. Skys was arrested in May 2008 and charged with one count of securities fraud and one count of bank fraud in connection with his fraudulent offers to sell the Sprint shares to the financial institutions, in violation of 15 U.S.C. §§ 78j(b) and 78ff, and 18 U.S.C. §§ 1344 and 2, and three counts of wire fraud in connection with interstate telephone or fax communications to Citigroup with respect to, inter alia, securities accounts with fraudulently stated balances, in violation of 18 U.S.C. §§ 1343 and 2. As indicated above, Skys entered a mid-trial plea of guilty on all counts.