Former Entellium CEO gets 3-year jail sentence for fraud

Island resident Paul Johnston, the former Chief Executive of the Seattle software startup Entellium, has been sentenced to three years in prison for defrauding investors in 2008. He must also pay more than $2 million in restitution—the amount of his salary and bonuses over the four years that the fraud occurred. U.S. District Judge Robert Jones passed the decision in federal court on March 27.

Johnston, 40, and his former colleague, Parrish Jones, 39, both admitted to cooking the books and defrauding investors out of more than $50 million. The two executives were arrested in October, 2008. Shortly after, Entellium collapsed. The company filed for Chapter 11 bankruptcy protection.

Jones, who was the Chief Financial Officer of Entellium, was sentenced to two years in prison and ordered to pay $865,000 in restitution. Both men were also ordered to perform 80 hours of community service in a soup line or homeless shelter to give them a better perspective on the repercussions of their fraudulent actions. More than 200 people lost their jobs because of the Entellium executives’ dishonesty.

According to the Seattle office of the U.S. Attorney’s office, Johnston, who is a U.K. citizen, is accused of keeping two sets of Entellium accounting books — one with real numbers and another inflated with false sales figures intended to lure investors.

The investigation of the fraud charges was conducted by the FBI and states that Johnston and Jones, of Seattle, lied about finances from March 2004 through last September. According to the complaint filed by the U.S. Attorney’s office, an employee in the human resources department found the falsified record books while cleaning the desk of another executive on Sept. 26. Four days later, Johnston and Jones quit.

Johnston owns a home on the South end of Mercer Island. He and his wife purchased the home in March 2006 for $1.1 million. Its appraised value is $1.4 million.

Wire fraud is punishable by up to 20 years in prison and a $250,000 fine. Entellium develops software for small and mid-sized businesses to manage their customers.


In consideration of how we voice our opinions in the modern world, we’ve closed comments on our websites. We value the opinions of our readers and we encourage you to keep the conversation going.

Please feel free to share your story tips by emailing editor@mi-reporter.com.

To share your opinion for publication, submit a letter through our website https://www.mi-reporter.com/submit-letter/. Include your name, address and daytime phone number. (We’ll only publish your name and hometown.) We reserve the right to edit letters, but if you keep yours to 300 words or less, we won’t ask you to shorten it.

More in News

t
Trees aplenty at YFS lot

Don Kovarik trims a tree at the Mercer Island Youth and Family… Continue reading

t
Island Freemasons rename lodge in honor of Dean LeClare Quigley

Ceremony for dedicated member took place on Dec. 2.

t
School district seeks ballot measure committees

The Mercer Island School District seeks interested parties to prepare statements in… Continue reading

t
Recology offers holiday cardboard recycling tips

As residents receive or purchase gifts this holiday season, the city’s recycling… Continue reading

Screenshot
King County weather: Dec. 3-5

Here is your King County area weather forecast for Dec. 3-5, 2021.… Continue reading

Keith Wagoner
Senator becomes first GOP candidate for secretary of state

Sen. Keith Wagoner will challenge Democrat Steve Hobbs, who was appointed to the statewide post in November

The Federal Way Performing Arts and Event Center is located at 31510 Pete von Reichbauer Way S. Olivia Sullivan/the Mirror
FEMA to send mobile COVID-19 vaccination unit to Western Washington

The mobile site is set to open Dec. 20 in Federal Way; additional locations to come.

t
School district opens new Pathways building for Adult Transition Program

Building is located on the Northwood Elementary site.

Courtesy of the Centers for Disease Control and Prevention
Washington health officials discuss response to new COVID variant

Things will be handled with Omicron variant similar to the Delta variant.

Most Read