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Software company's ex-CEO pleads guilty to stock fraud
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A Vadnais Heights man who formerly ran a company that created software for cell phones pleaded guilty Tuesday to bilking a friend out of about $168,000 in a fraudulent stock deal.
Richard Lynn Barnaby, 59, pleaded to one count of investor fraud by wire. He said he had been chief executive of Teledigital Inc. from 1997 through 2004. The company went public the year he left and went out of business a couple of years later, he said.
Barnaby told U.S. District Judge James Rosenbaum that he helped to broker trades between buyers and sellers of Teledigital's stock. Barnaby said he sold stock to a friend that he didn't actually have available to trade, and then pocketed the cash. In September 2005, Barnaby said he sent a message to his friend that purportedly came from an official at Wells Fargo bank stating that the bank, acting as the stock transfer agent, was holding the stock until certain fees were paid.
That e-mail, which moved "by wire" across the Internet, made the fraud a federal crime.
Barnaby's plea agreement suggests a sentence of 15 to 21 months in prison. Rosenbaum said that he would review the advisory sentencing guidelines, but he noted that he could sentence Barnaby to as many as 20 years in prison under the statute. He also faces as many as three years on supervised release, mandatory restitution estimated at $235,000, and a fine of as much as $250,000 or twice the amount he stole.
Teledigital, a Delaware corporation with its principal place of business in Minnesota, sold prepaid cellular phone software services and equipment.
Dan Browning • 612-673-4493
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