BlackBerry

Former Wireless Retail Exec gets 5 Months prison for BlackBerry Leak

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In the U.S., a former wireless retail executive has been sentenced to five months in prison for selling confidential industry information to an analyst whose subsequent 2013 report on sales of BlackBerry’s Z10 sent the company’s stock price downward.

According to prosecutors and court papers, James Dunham, former chief operating officer of Connecticut company Wireless Zone, entered a secret consulting relationship with an analyst at Boston-based financial firm Detwiler Fenton in 2010 to provide wireless industry information in exchange for $2,000 per month.

The scheme came to light in April 2013 after Dunham provided information about a company’s newly released smartphone, prosecutors said.

While not identified in court papers, the manufacturer matches the description of BlackBerry, whose launch of the BlackBerry Z10 smartphone was considered critical to the company.

Prosecutors said after Dunham told analyst, Jeff Johnston, that returns of the phone exceeded sales at some of the franchiser’s stores, Detwiler Fenton issued a report based on that information. BlackBerry’s stock price fell 7 percent after the release of the report.

Boston-based financial firm Detwiler Fenton said at the time:

“In several cases, returns are now exceeding sales, a phenomenon we have never seen before,”

BlackBerry immediately denied the report but then went further and said that the report was not only wrong, it was so wrong that it should be investigated by securities regulators.

“Sales of the BlackBerry Z10 are meeting expectations and the data we have collected from our retail and carrier partners demonstrates that customers are satisfied with their devices,”said BlackBerry President and CEO Thorsten Heins.

“Return rate statistics show that we are at or below our forecasts and right in line with the industry. To suggest otherwise is either a gross misreading of the data or a willful manipulation. Such a conclusion is absolutely without basis and BlackBerry will not leave it unchallenged.”

Prosecutors said the information was accurate so far as the franchiser’s stores went, though may not have been with respect to overall sales and returns.

In February of this year, it was reported tha James Dunham, former chief operating officer of Connecticut company Wireless Zone, had been charged with mail fraud and wire fraud.

At the time, it was noted that the complaint did not identify Detwiler, BlackBerry or Wireless Zone by name but the Boston Business Journal claimed to have been able to identify the companies by comparing information in the complaint with publicly available financial records.

Dunham, 60, was also ordered by U.S. District Judge Douglas Woodlock in Boston to serve five months of home confinement after his prison term and to pay $76,000 in light of his June guilty plea to a wire fraud charge.

Incredibly, Johnston was never charged and remains employed at Detwiler Fenton, which did not respond to requests for comment.

 

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