Former CyberNet President Arrested (two sound clips J http://www.mjq.net/fiveo/sounds/mcgarret.wav http://www.mjq.net/fiveo/sounds/book-em.wav The former president of CyberNet, Grand Rapid, Michigan has been charged with criminal action. James Michael Horton, 54, is charged with four federal felonies: criminal conspiracy, bank fraud, money laundering and attempting to conceal the whereabouts of $700,000 in fraud proceeds. The founder of CyberNet Barton Watson committed suicide in 2004, two weeks after federal agents served search warrants on Cybernet's headquarters. James Michael Horton, 54, is charged with four federal felonies: criminal conspiracy, bank fraud, money laundering and attempting to conceal the whereabouts of $700,000 in fraud proceeds. His classic quote: "I wish I had never met the Watsons." Only $4 million in assets were found with over $114 million in liabilities, many for computers that did not exist. An auction on Bart Watson wine collection and personal items raised over $1 million. A book about Watson is being written by James H. Cameron, Assistant Attorney General in the Criminal Division of the Maine Office of Attorney General. The wife of Bart Watson, Krista Kotlarz-Watson, filed bankruptcy, listing assets and liabilities lists two pages of home furnishings with no specific values attached. There was $1.35 million in real estate, including a home on Mountain Ridge Drive NE valued at $800,000. Washington Mutual Bank, however, has a lien on the Ada property for $783,000. Creditors were expected to recover very little. Authorities say the scam at CyberNET may have very well started when the company itself did in the early 90s, just after Barton was released from jail, where he had been imprisoned on a fraud conviction. An FBI affidavit explains how investigators say the scam worked. CyberNET would approach a bank saying that it wanted a loan for computers from, for example, Teleservices, a company that was actually part of the CyberNET Group. The bank would call Teleservices, and that company would, in turn, vouch for CyberNET. As a result, the loan would be secured. The cash from the loan would then be pocketed. There were red flags all over. In 2002, accountant Guy Hiestand found highly inflated earnings. CyberNET claimed a check written to the company by Tokyo Electron was for $282,948.97. Tokyo Electron says there was a check, but that its amount was actually for $6.18. Ethical standards required Hiestand to tell a higher up. He emailed Barton Watson and quit. Another example of inflated numbers is found in a CyberNET brochure. In a draft version of the brochure, revenue is estimated at $300 million. In the final version of the brochure, revenue is stated at $200 million. From the draft to the final version, the company was playing around with a $100 million. Previous stories: Here is the web site of James M. Cameron , who is writing a book: |
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