U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 20329 / October 12, 2007
SEC v. Vencent A. Donlan, Defendant, and Robin D. Colls Donlan, Relief Defendant, Civil Action No. 07 CV 793 JAH (LSP) (S.D. Cal.)
Former Stock Options Administrator Sentenced to Forty-Six Months in Prison for Wire Fraud and Tax Evasion in Connection With Theft of Stock Options
Vencent A. Donlan, former stock options administrator at Wireless Facilities, Inc. ("WFI") (now Kratos Defense & Security Solutions, Inc.), has been sentenced to forty-six months in prison for federal wire fraud and tax evasion violations relating to his fraudulently obtaining stock and stock options from WFI. Donlan pled guilty to the violations on July 3, 2007, under a plea agreement with the United States Attorney's Office for the Southern District of California. The Securities and Exchange Commission ("Commission") previously sued Donlan for perpetrating the fraudulent stock options scheme.
In his plea, Donlan admitted that between November 2002 and November 2003, he used his position as WFI's stock option administrator to issue without authorization 728,229 shares of WFI stock to a brokerage account that he controlled and sold the stock for a net gain of $6,252,794. Donlan also admitted that he evaded paying $2,202,917 in federal income taxes in 2002 and 2003 by not declaring the income from his WFI stock sales. The Honorable John A. Houston, United States District Court Judge for the Southern District of California, accepted Donlan's final plea and sentenced him on October 9, 2007. [United States v. Vencent A. Donlan, Criminal Action No. 07 CR 1725 JAH (LSP) (S.D. Cal.).]
On May 2, 2007, based on allegations similar to those admitted by Donlan in his plea, the Commission obtained an order temporarily restraining Donlan from violating the antifraud provisions of the securities laws and freezing his assets. On June 5, 2007, the Commission obtained an order permanently enjoining Donlan from violating the registration and antifraud provisions of the securities laws and requiring him to disgorge all ill-gotten gains from the fraud, with prejudgment interest thereon, and pay civil monetary penalties in amounts to be determined. [Securities and Exchange Commission v. Vencent A. Donlan, Defendant, and Robin D. Colls Donlan, Relief Defendant, Civil Action No. 07 CV 793 JAH (S.D. Cal.).]