Tuesday, 2 December 2008

Scandinavian CEO elopes after US$100 million fraud in IT company

Case ties in with former Gizmondo CEO and convicted criminal Carl Freer & Mikael P. Ljungman and creates a big black eye to Ernst & Young who 1 week before applauded the CEOs company as best of the best..

Danish IT Company “IT Factory” has been hailed as the “Success of Successes” companies in the Danish IT sector. Lead by charismatic CEO of Norwegian descent, Stein Bagger, the company had an estimated net worth of US$ 1.5 billion – until this Friday. Now it is bankrupt.

IT Factory CEO elopes from Dubai
On a pleasure trip to Dubai in the United Arab Emirates with his wife, IT Factory CEO Stein Bagger suddenly disappeared this Thursday and became impossible to reach. His wife since 2003 started a search together with the Danish Consulate in the UAE, only to discover that the husband left from Abu Dhabi airport at 03.00 am the night to Friday.

Then things started to unfold very quickly. First it turns out that the missing CEO Stein Bagger rented a little office, close to the main office of IT Factory. From there it seems he had been running his “fraudulent” part of the business, issuing purchase orders with forged signatures to IT Factory, managed an advanced leasing scam, forging the Chairman of the Boards signatures and much more.

In a statement to the Danish Press, the Chairman of IT Factory claims the total embezzlement is in the region of US$ 100 million, and had taken place over several years.

The link to criminal Carl Freer
The Danish version of IDG Computerworld had 3 weeks before started to dig into the true story behind the apparent success of IT Factory. They dug out that some of the clients and resellers listed on IT Factory’s homepage was not all what they seemed to be.

Some clients denied ever buying software from IT Factory. Other dealers said they did not know why they was listed as dealers on the website. Others had asked to be removed a long time ago as references.

And suddenly – two of the very big reference names strike the Computerworld Denmark guys as strange. Media Power Inc and eCommerce LLC. Both companies controlled by Mikael P. Ljungman and founded by Carl Freer. (website www.themediapowergroup.com)

Confronted with the dud references, CEO Stein Bagger said “We do not check the background of the people behind eCommerce LLC and Media Power Inc. As long as the behave nice we will keep them on as dealers”

And they Black Eye go to... (drum roll) Ernst and Young
Ernst & Young evaluated IT Factory and did not find anything but “greatness” – they looked through the 2007 accounts and could not find any cause to doubt the figures. They had hour long interviews with the now missing CEO without spotting any wrong doing. And even after IT Blogger Dorthe Toft had pointed out some suspect issues in the Danish press about IT Factory, Ernst and Young “double checked” again 2 weeks ago – and that did not lead to any changes of heart about giving IT Factory the Danish version of the price: “Ernst & Young Entrepreneur Of The Year®”

Black Eye runners up are Danish Computerworld who gave IT Factory 2 consecutive prices as “Best of IT” – before they started digging up the nasty stuff. But Computerworld was also part of showing the real "IT Factory" so they should be excused a bit for their part of scam boosting.

3rd Black Eye runner up is the IT Factory audit company … “KPMG Denmark” who have not been able to find anything wrong with companies accounts the last few years.

The recap
So the CEO is missing. IT Factory is missing US$100 million and is bankrupt, with 115 jobs lost. Newspapers in Denmark are full of stories about the missing guy and the fraud. Now the “former” CEO, who is a former body builder, is tied to Carl Freer and whispers from Danish police even mention Hells Angels relations. So was this planned? Was it all just a gigantic fraud from the beginning or was it a CEO trying to boost his ego by committing fraud. Only the future will tell – if he ever gets found.

In any case – this is material for a book and a Hollywood movie deal. Real life often surpasses what fiction writers can dream up. Maybe this will become a feature on CSI Miami – all we need now is a murder and the story is worth a lot of dollars. May I suggest that the remains after IT Factory gets a revenue share deal?


about the bankruptcy and CEO (in Danish)

IT Factory bankrupt and CEO is on the run
Danish Computerworld articles about IT Factory’s collapse

About Carl Freer

2nd Arrest Made in Ferrari Case
Gizmondo's Spectacular Crack-up


Sixter Pazmino said...

this is bs. people are always laming the easiest target.

there are no ties between the people or the companies...

Kaz said...

Well BS?

no not at all. The mentioned people have to Danish media confirmed they worked with IT Factory.

They just claim so far they was not aware of any scams.

But lets see now papers are starting to come out, documenting who did what, where and why.