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Vulnerabilities / Threats

SEC: WFI Insider Stole $7.7M

Stock options manager accused of abusing access rights to embezzle 700,000 shares from wireless security firm

The Securities and Exchange Commission (SEC) has filed charges against a stock options manager at Wireless Facilities Inc. for using software and online services to steal $7.7 million in stock from his company.

Vencent Donlan, 44, was charged with using the company's Equity Edge stock plan management and reporting application and E*Trade to route more than 700,000 shares of his company's stock into an account held by his wife, Robin Colls Donlan. He also is accused of falsifying entries in Equity Edge to cover his tracks.

WFI, ironically, is an outsourcing provider in the wireless industry that provides (among other offerings) "security systems and engineering services." The alleged theft, which took place between 2002 and 2003, was spotted during an audit and forensic analysis of the company's stock option plan.

According to the SEC documents, Donlan held administrative rights to Equity Edge -- a program used by company stock administrators to track and dole out shares to employees -- to create an E*Trade account in his wife's name. He then allegedly made false entries in Equity Edge to create, and then hide, stock options grants to his wife, and then lied to E*Trade to cover his activities.

Donlan made some 27 transfers to his wife's account over a 13-month period, the SEC says. He is said to have falsified software entries to make it look like the transfers were authorized, and he allegedly hid the activity by listing some of the stock options in accounts that were nicknamed after company executives -- but held his wife's Social Security number.

Once the shares were in his wife's account, Donlan exercised the options and sold the stock on the open market, the SEC asserts. He and his wife allegedly then transferred the proceeds out of her account, using wire transfers, checks, and ATM withdrawals. The money is now spread out through several accounts in Donlan's name, including a TD Ameritrade account that holds approximately $1.83 million, the SEC says.

The SEC is asking for Donlan to return the money and pay civil fines. The documents did not say whether WFI or law enforcement will press criminal charges.

— Tim Wilson, Site Editor, Dark Reading

Tim Wilson is Editor in Chief and co-founder of Dark Reading.com, UBM Tech's online community for information security professionals. He is responsible for managing the site, assigning and editing content, and writing breaking news stories. Wilson has been recognized as one ... View Full Bio

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