U.S. Technologies Inc., a once high-flying Washington firm, ceased to exist as a publicly traded company when its stock was de-registered yesterday, four months after chief executive C. Gregory Earls was convicted of defrauding investors of $13.8 million.
Once a firm that specialized in using prison labor in manufacturing, U.S. Technologies became an incubator of Internet and other high-tech companies during the boom of the late 1990s and saw its stock price soar from a few cents to $6 in early 2000. But after the bubble burst, Earls was charged and convicted of bilking investors who put $20 million into a related private firm, USV Partners LLC, by using the money for personal gain rather than buying U.S. Technologies stock, as he had promised.
The company's stock was deregistered, meaning that it no longer can be traded publicly in any fashion as part of a settlement with the Securities and Exchange Commission. In that settlement, the company neither admitted nor denied wrongdoing and promised not to violate securities laws. Its stock, which traded under the symbol USXX, has been priced below 1 cent per share since August 2002, with the exception of two days in June 2003, when it briefly reached 11 cents.
U.S. Technologies' woes drew national attention in fall 2002, when the former head of its audit committee, ex-FBI director William H. Webster, was chosen to head the federal accounting board panel created in the wake of the scandals at Enron Corp. and WorldCom Inc. Following news reports that U.S. Technologies had been sued for fraud by investors, Webster withdrew his name from consideration. The brouhaha helped prompt the resignation of Webster's sponsor, Harvey L. Pitt, who was chairman of the Securities and Exchange Commission at the time.
Earls is likely to face more than a dozen years in prison when he is sentenced Oct. 13 in U.S. District Court in Manhattan.