Former Firepond exec arrested on fraud charges upon entering U.S.

A former executive of Firepond Inc., a company formerly headquarteredin Waltham, was arrested Tuesday as he attempted to enter the UnitedStates at the Lewiston Bridge in Niagara Falls, N.Y.

James E. Reid allegedly faked $4.8 million in deals, forgedcustomer signatures and was paid $156,000 in commissions for one of thedeals, according to a federal indictment.

Reid, a Canada-based executive, was acting vice president ofFirepond, a software company. He was charged upon his arrest with onecount of mail fraud and nine counts of wire fraud, which occurredduring his Firepond employment from March 2001 through June 2002,according to the U.S. Department of Justice.

Further, the U.S. Securities and Exchange Commission filed a civilfraud action suit against Reid on Tuesday. The SEC says Reid forcedFirepond to materially misstate its financial results for two quartersin 2002.

The federal indictment alleges that Reid concocted a scheme thatincluded e-mail exchanges, telephone calls and phony meetings relatedto a deal with Montreal-based Bombardier Inc. Reid went so far as tohave someone impersonate Bombardier executives in telephone calls withFirepond executives and to set up a joint meeting that was canceled atthe last minute, the indictment said. Reid also forged a Bombardierexecutive's signature on a sales contract, the indictment said.

Reid told Klaus Besier, Firepond's CEO at the time, that Bombardiersigned a $3.4 million contract, which entitled Reid to a $313,393commission, according to the indictment. Reid earned a 9 percentcommission on deals, above his $150,000 annual salary. Besierdiscovered the alleged scheme in the spring of 2002 when he e-mailedBombardier's COO directly, after having a telephone conversation withsomeone identified as the COO, and learned that the real COO did notknow of the call or deal, according to the indictment.

Reid was also charged with fabricating a $450,000 contract withPennsylvania-based Joy Mining Machinery Inc. and a $900,000 contractthat expanded a previous deal with ABB Ltd. of Switzerland. Reid'scommission on those two combined deals would have been $121,000.Firepond's CEO discovered both deals were frauds before the commissionswere paid, according to the indictment.

Reid was indicted and appeared in federal court today in Buffaloand will appear at a later date before Chief U.S. Magistrate MarianneB. Bowler in Boston federal district court for arraignment.

If found guilty, Reid faces five years in prison and a $250,000 fine for each count.

Firepond was based in Waltham until 2002. It is now based inMinneapolis and is a subsidiary of Jaguar Technology Holdings LLC.