Stein Bagger

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Stein Bagger
Born (1967-01-20) January 20, 1967 (age 47)
Nationality Danish
Occupation Businessman
Partner(s) Mikael Ljungman

Stein Bagger (born January 20, 1967) is a Danish businessman, entrepreneur and former CEO of the bankrupt company IT Factory. Before bankruptcy and a subsequent fraud scandal, he was named "Danish Entrepreneur of the Year" by Ernst & Young, and his company was named "Denmark's best IT company" two years in a row by the magazine Computerworld. On the 11 June, 2009, Stein Bagger was sentenced to a seven-year prison sentence. He was released on licence on 24 March, 2014, having served approximately 5 years of his sentence.[1]

Disappearance and charges[edit]

Bagger disappeared on 27 November, 2008, while on a trip to Dubai with his wife and business colleagues.[2] On 1 December, information emerged indicating that IT Factory's revenue had been artificially inflated and a leasing scam had defrauded banks and private investors for over 1.2 billion Danish kroner (250 million US dollars),[3] making this the biggest financial fraud case in Denmark in recent decades.[4] As a result, Bagger was charged with fraud and forgery, and a warrant for his arrest was put out by Interpol.[5]

Fake degrees[edit]

Stein Bagger claimed that he had several academic degrees, including an MBA and a PhD in International Business from "San Francisco Technical University". No such university exists. After reporters inquired about the alleged degrees, Bagger hired an American actress to impersonate an official of the fake university, to "verify" his degrees.[6][7]

Re-emergence and incarceration[edit]

Stein Bagger turned himself in to US police in downtown Los Angeles at approximately 21:00 GMT on 6 December 2008.[8][9] Bagger had reportedly left Dubai on a plane destined for New York where he borrowed a car from a Swedish friend, Mikael Ljungman, before making a cross-country trip to Los Angeles. According to statements posted by him on his family's blog (and later repeated in an interview[10] and apparently in court[11]), he had allegedly been a victim of systematic extortion and threats towards his family, forcing him to take fraudulent steps in order to raise revenue to secure his family. However, many critics doubt the veracity of those statements. Bagger was held in US custody until his extradition to Danish legal authorities. On December 16, he was extradited to Denmark and jailed pending further investigations.

Nature of scam[edit]

Investigations revealed that Bagger employed a duping scheme by forging large sales orders creating fictional revenue. In the scheme, real and fictional overseas "partner" companies sold non-existent large hardware and software bundles (such as a complete $10 million hosting center) to IT Factory, IT Factory then obtained leasing contracts financing the fake purchases. About half the leasing funded money paid to the partner was spent on purchases of software from IT Factory, thus inflating company earnings. The leasing contracts were not considered debts under the accounting standards used, so IT Factory looked lucrative on paper, and because the leased goods were fictional, each "partner" was left with about half the price as personal profit. Since each fraudulent transaction was for such a large amount, only a relatively small number of fake documents would be needed to pull off the $200 million scam.[12]

References[edit]

  1. ^ Steengaard Nielsen, Trine. "Stein Bagger løsladt: Hvor er millionerne?". BT. Berlingske Media. Retrieved 24 March 2014. 
  2. ^ "Where In The World Is IT Factory's Stein Bagger?". Channel Web. Retrieved 2008-12-29. 
  3. ^ "Nye skeletter venter i IT Factory". business.dk. 2008-12-06. Retrieved 2008-12-29. 
  4. ^ "Tab efter Bagger eksploderer". Berlingske Tidende. 2008-12-02. Retrieved 2008-12-29. 
  5. ^ "Bagger, Stein". Interpol. Retrieved 2008-12-29. [dead link]
  6. ^ The Wall Street Journal http://online.wsj.com/article/SB122945517473311217.html |url= missing title (help). 
  7. ^ The Wall Street Journal http://online.wsj.com/article/SB122944722553110859.html |url= missing title (help). 
  8. ^ "Fugitive Danish IT Chief Surrenders to LA Police". PC World. 2008-12-07. Retrieved 2008-12-29. 
  9. ^ Lin II, Rong-Gong; Blankstein, Andrew; Larrubia, Evelyn (2008-12-07). "Danish fugitive turns himself in to LAPD". LA Times. Retrieved 2008-12-29. 
  10. ^ "Grædende Bagger: Undskyld". 2008-12-12. Retrieved 2009-01-05. 
  11. ^ "Stein Bagger erklærer sig skyldig". 2008-12-16. Retrieved 2009-01-05. 
  12. ^ "Sådan foregik Stein Baggers million-svindel". ComOn. 2008-12-01. Retrieved 2011-02-16.