U.S. Technologies CEO pleads innocent to fraud

Thursday, April 3, 2003

NEW YORK -- U.S. Technologies CEO C. Gregory Earls pleaded innocent Wednesday to charges he cheated investors out of $15 million and diverted some of the money to a trust for his children.

His attorney, Thomas Green, said it was unclear whether Earls could afford a permanent lawyer because the Securities and Exchange Commission froze Earls' assets. A federal judge gave Green and Earls a month to settle the matter.

The scandal tainted former FBI Director William Webster, who led U.S. Technologies auditing committee.

Prosecutors say Earls misappropriated $13.8 million from USV Partners, a company that was investing in U.S. Technologies. They say he redirected some of it to an educational trust for his children and his ex-wife.

He is also accused of pocketing more than $1 million from investors who thought they were financing an Internet company.

Earls and Green declined to comment outside court.

U.S. Technologies, based in Washington, D.C., once focused on providing contract labor using prison inmates and has since expanded to include e-commerce and consulting.

The company's accounting problems led Webster to resign in November as head of a special accounting oversight board created by Congress to restore investor confidence. Webster fired the company's outside auditors when he led the auditing committee.

The furor over Webster's appointment led to SEC Chairman Harvey Pitt's resignation in November.

On the Net:

U.S. Technologies: http://www.usxx.com

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