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FOR IMMEDIATE RELEASE:

May 16, 2006

TWO FUND MANAGERS CONVICTED FOR $15,000,000 FRAUD RELATED TO MAYFLOWER VENTURE CAPITAL FUND III

RALEIGH - United States Attorney Frank D. Whitney announced that BRENT E. WOOD and DIANE W. PACE were convicted on Thursday, May 11, 2006, by a jury in United States District Court, Raleigh, North Carolina. WOOD AND PACE were two of four individuals associated with a bankrupt $15,000,000 venture capital company. They had been indicted by a federal grand jury in March, 2005. Also, named in the original Indictment were STANLEY H. VAN ETTEN, 45, of Bridgestone Drive, Orlando, Florida (formerly of Raleigh); BRENT E. WOOD, 43, of Cary, N. C.; TOM D. EILERS, 73, of Cary, N. C.; and DIANE W. PACE, 43, of Cary, N. C. EILERS and VAN ETTEN previously pleaded guilty and agreed to cooperate during the remainder of the investigation.

WOOD and PACE were convicted on eight of the counts named in the nine-count indictment for offenses related their roles as Management Committee members of the bankrupt Mayflower Venture Capital Fund III, LLC (“FUND III”).

The indictment charged conspiracy, wire and mail fraud, and conspiracy to commit money laundering related to the use of approximately $15,000,000 collected by FUND III from about 145 investors between February, 2000 and November, 2000.

According to the evidence, a series of venture capital companies using the name “Mayflower” were established between 1996 and 2000 for the purpose of investing in start-up companies and on-going businesses. All were partially owned, principally controlled by, or otherwise related to STANLEY H. VAN ETTEN. FUND III was specifically established to invest in a planned initial public offering (IPO) by the Durham, N. C., based company named BuildNet. FUND III was managed by a “Management Committee” consisting of defendants DIANE W. PACE, BRENT E. WOOD, Esq., and three others, with offices in Raleigh, N. C.; Dallas, Texas; London, England; and Zurich, Switzerland. The charges set forth that PACE was an Investment Advisor and Contact Person and WOOD was the Lawyer.

Evidence presented in the trial established that STANLEY H. VAN ETTEN, although not a named Fund Manager or member of the Management Committee, controlled and directed the use of funds, while DIANE W. PACE, M.B.A., and TOM D. EILERS, C.P.A., managed bank accounts and fund records and BRENT E. WOOD served as legal counsel for the fund.

The object of the conspiracy was for FUND III to obtain approximately $15,000,000 from investors for investment in the BuildNet IPO. Subsequently, the funds were fraudulently diverted to other unauthorized investments and purposes without the knowledge or consent of the investors. The acts included a series of “updates” the defendants sent to investors between about May, 2000, and November, 2000, wherein they falsely represented and assured the investors that FUND III money was exclusively reserved for the BuildNet IPO. In fact, the FUND III money had already been used for other purposes without the knowledge or consent of the investors. The scheme began to unravel when BuildNet withdrew their IPO, and FUND III was unable to return the investors’ money as promised.

As of this date, ten former VAN ETTEN associates have pleaded guilty or have been found guilty for charges related to International Heritage Incorporated (IHI), Mayflower Venture Capital or related businesses. Sentencing dates have not been set. Investigations of the IHI, Mayflower, and other VAN ETTEN- related cases were conducted by the Federal Bureau of Investigation and the Internal Revenue Service - Criminal Investigation Division, with the assistance of the Securities and Exchange Commission (SEC), Atlanta, Georgia. Assistant U. S. Attorneys J. Gaston B. Williams and Clay C. Wheeler are prosecuting the case for the United States.

 

News releases are available on the U. S. Attorney’s web page at www.usdoj.gov/usao/nce within 48 hours of release.

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