Ex-FTE Networks Execs Charged with Fraud

By July 17, 2021 July 30th, 2021 Investment Fraud

Michael Palleschi and David Lethem, former top executives of telecommunications company FTE Networks, were recently charged by both federal prosecutors and the Manhattan District Attorney’s office relating to a fraudulent scheme involving misstating the financial condition of the company.

As detailed in a recent CNBC website article:

“Palleschi, the ex-CEO of FTE Networks, and Lethem, the company’s former chief financial officer, are accused in the federal case and SEC complaint of a broad scheme to fraudulently hide FTE Networks’ deteriorating financial condition from 2016 through 2019.

The men also are accused in those cases of embezzling millions of dollars from the company to pay for private jet use, luxury automobiles, personal credit cards, unauthorized wire transfer, stock issuances and unauthorized salary increases.

In the grand jury indictment obtained by the office of Manhattan DA Cyrus Vance Jr., the men are accused of stealing more than $28 million in construction trust assets from a Manhattan-based firm, Benchmark Builders, beginning in November 2018.

The men allegedly diverted those assets from the company, which was a wholly owned subsidiary of FTE Networks, to repay millions of dollars in third-party loans obtained by FTE. They are charged with first-degree grand larceny in that case.”

According to a Securities and Exchange Commission news release, “The SEC’s complaint charges Palleschi and Lethem with directly violating or aiding and abetting violations of antifraud, reporting, and proxy solicitation provisions of the securities laws.  The complaint seeks permanent injunctions, penalties, and officer-and-director bars against Palleschi and Lethem, disgorgement and prejudgment interest, and a clawback of equity-based compensation paid to Palleschi during the alleged fraud.”

Fishman Haygood’s Investment Fraud Division has experience bringing claims on behalf of investors who were duped in fraudulent schemes. Please contact us to discuss your possible claim.