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Guilty Plea in SureWest Fraud Case

One of three men implicated in the misappropriation of $2 million from competitive cable and telephony provider SureWest Communications has pleaded guilty to two fraud charges.

According to the U.S. Attorney’s Office for the Eastern District of California in Sacramento, Henry Mead Kaiser of Piedmont, Calif., has admitted to his role in the scheme, which was discovered by SureWest late last year.

Kaiser is the grandson of industrialist Henry J. Kaiser. Due to the prosecution, Kaiser resigned from boards of directors of ventures bearing his family’s name.

Kaiser was a partner with Larry J. Wells in a venture-capital company called Quivira Ventures. According to assistant U.S. attorney R. Steven Lapham, who is prosecuting the case, the pair used money from SureWest that was transferred into Quivira accounts by Wells’ son, Jeffrey, who was a senior treasury analyst for the telco.

Prosecutors said Kaiser knew at the time that the younger Wells did not have authority to make the transfers, which ultimately amounted to about $25 million.

Kaiser told prosecutors the funds were used in the United States and Europe to demonstrate to potential partners that Quivira had sufficient funds for its proposed business ventures.

Most of the funds were returned to SureWest except for $2 million that authorities said was transferred from Quivira accounts to an account in Luxembourg.

Kaiser entered a guilty plea April 13 to Judge Morrison England. He could be sentenced to a maximum penalty of 20 years in prison. He is to be sentenced July 27.

Authorities are still building their case against the Wellses.