Gowex Boss Paid Maid $405 to Hide His $2.6 Billion Fraud

Lets Gowex SAs founder and his wife paid their maid 300 euros ($405) to help him fake clients for the Wi-Fi hotspots provider that was exposed this month as a fraud.

Chief Financial Officer Francisco Martinez escorted Guillermina Almeida to a notary and several banks to sign papers creating at least one company that purported to buy Gowex services, Almeida told Judge Santiago Pedraz of Spains National Court today, according to a court statement.

Florencia Mate introduced Almeida to Martinez, according to the statement, which was read by an official who cant be named under court policy. Mates husband, Jenaro Garcia, founded Gowex and she served as investor relations manager and on the companys board. Mate has also been called to answer questions before Pedraz.

Gowexs market value reached as high as 1.9 billion euros three months ago. The one-time darling of the Spanish tech community -- which Garcia projected would provide free Wi-Fi to 20 percent of the world population by 2018 -- started unraveling July 1, when short-seller Gotham City Research LLC said Gowex lied about its earnings. The stock plummeted 60 percent in two days after Gothams report and trading was suspended on July 3.

Martinez told Pedraz last week that he was following Garcias orders and couldnt stop him from faking accounts. Garcia resigned as chief executive officer on July 5 and told the judge he had falsified records since at least 2005 and made up clients to attract investors to the 15-year-old company.

Two other witnesses told Pedraz today that they too signed paperwork to form make-believe Gowex clients. Javier Vaquero said Martinez, a university friend, introduced him to Garcia. Vaquero told the judge he worked for Gowex for three months making photocopies and signed ownership papers for 10 companies. He said he left Gowex because they didnt pay him, according to the statement.

Antonio Salmeron told Pedraz he created two companies with Martinez as his partner. They never developed into anything and were abandoned years ago, he said. Salmeron only found out the companies, which hadnt been legally shut down, were being used as Gowex clients, under his name, when the scandal became public, according to the statement.

Pedraz questioned Gowexs auditor, Jose Antonio Diaz Villanueva, last week and said Diaz admitted that he not only helped cover up the fictitious accounts, he also didnt report the money he made working on Gowex to the tax authorities.

Garcia was ordered to hand in his passport and report into authorities once a week after appearing before Pedraz on July 14. He was given a 600,000 euro bail and the judge put a freeze on a 3 million-euro bank account in Luxembourg that Garcia told Pedraz he held under the name of another company.

To contact the reporter on this story: Rodrigo Orihuela in Madrid at rorihuela@bloomberg.net

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Gowex Boss Paid Maid $405 to Hide His $2.6 Billion Fraud