Career
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 Information Technology 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.
On 1 December, information emerged indicating that Information Technology Factory"s revenue had been artificially inflated and a leasing scam had defrauded banks and private investors for over 875 million Danish kroner (186 million United States dollars), making this the biggest financial fraud case in Denmark in recent decades.
As a result, Bagger was charged with fraud and forgery, and a warrant for his arrest was put out by Interpol. Stein Bagger claimed that he had several academic degrees, including an Master of Business Administration and a Doctor of Philosophy in International Business from "San Francisco Technical University".
Number 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.
Stein Bagger turned himself in to United States police in downtown Los Angeles at approximately 21:00 GMT on 6 December 2008.
According to statements posted by him on his family"s blog (and later repeated in an interview and apparently in court), 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 United States custody until his extradition to Danish legal authorities.
On December 16, he was extradited to Denmark and jailed pending further investigations.
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 Information Technology Factory, Information Technology 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 Information Technology Factory, thus inflating company earnings. The leasing contracts were not considered debts under the accounting standards used, so Information Technology 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.
