2 Former Executives of U.S. Wireless Indicted

Two former executives of U.S. Wireless Corp. were charged Monday with securities fraud in connection with unauthorized payments that authorities said led the maker of cell phone location systems to file for bankruptcy protection.

The U.S. attorney’s office in San Francisco said former Chief Executive Oliver Hilsenrath and David Klarman, the company’s former general counsel, improperly transferred $3.2 million in company stock and $428,000 in cash to offshore entities they controlled and caused the company to file false financial statements.

After the transfers were disclosed, the company restated its fiscal 2000 results and its losses increased by 55% to $17.7 million.

U.S. Wireless, based in San Ramon, Calif., filed for bankruptcy protection in August 2001, three months after the transfers were discovered. Its assets were sold to Trafficmaster USA Inc., the U.S. unit of Trafficmaster, a British maker of navigation software, according to U.S. Wireless’ Web site.

“Today’s indictment alleges that the defendants betrayed the trust of U.S. Wireless shareholders by using the company’s money for their own personal gain,” Deputy Atty. Gen. Larry Thompson said.

Hilsenrath, who lives in Israel, doesn’t have legal representation, the U.S. attorney’s office said, adding that the U.S. government will seek his extradition.

Klarman was arrested Monday at his home on Long Island. Klarman’s attorney didn’t respond to a phone call seeking comment.

The indictment says the two men, using phony consulting contracts, caused the company to make monthly cash payments to their offshore shell corporations.

Hilsenrath and Klarman were indicted on three counts of securities fraud and, if convicted, face a maximum penalty of 10 years in prison and a $1-million fine for each count.

Hilsenrath also was indicted on 33 counts of wire fraud; Klarman was indicted on 16 counts of wire fraud, the U.S. attorney’s office said.