In what will surely be one of the more eyebrow-raising bits of news for all of 2018, Elizabeth Ann Pierce, the former CEO of Quintillion, has been arrested by the FBI. According to reports (Capacity has a great summary), she used ‘forged guaranteed revenue contracts’ to convince investors to invest in the company.
How much, you ask? Apparently she convinced the money guys that Quintillion had wholesale contracts worth $1B, and managed to rase $250M. No those are not typos, and yes I had to quickly make sure it wasn’t still April 1. Quintillium says it self reported the situation last summer, which led to Pierce’s resignation and the investigation that got us here today.
Quintillion has a fiber cable along the northern and western coast of Alaska and a terrestrial cable connecting it to Fairbanks. But that’s just Phase 1, Phase 2 and 3 envision connecting Japan and Europe through the Arctic while hooking up the larger Inuit towns along the way, a dream that they inherited when they bought Arctic Fibre.
The firm that was allegedly the main victim of all this wasn’t named, but has apparently invested $200M in the company and helped it gain a $50M loan from a fellow investment firm. Those are some big numbers to be putting behind a project like this; those forgeries and the sales pitch must have been pretty darn convincing.
It’s not easy to get revenue commitments like these even on routes with well understood risks and economic value. Look how hard it was to get what became the Hawaiki cable off the ground, or how little actual revenue Allied Fiber managed to actually nail down in the southeastern USA.
I’ve always felt that Quintillion had/has an even higher funding mountain to climb and that only governmental contracts would probably have to make up the piece that private sector economics surely couldn’t. I’d like to think I wouldn’t have believed the forged documents either, but I’m glad I wasn’t in that position. Perhaps the remoteness and uniqueness of the system short circuited the sense of danger here.
Hopefully Quintillion itself will come through all this, and hopefully their efforts really will be worth that investment one day.
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