Guilty Plea in SureWest Funds Transfer

Henry Mead Kaiser, a former Kaiser Permanente board member and grandson of the industrialist Henry J. Kaiser, pleaded guilty for his role in diverting $2 million from telecommunications company SureWest Communications to his venture capital firm.

Kaiser, 59, pleaded guilty Tuesday to interstate transport of money obtained by fraud and conducting a transaction with stolen money, the U.S. attorney in Sacramento said. As part of his plea agreement, Kaiser is cooperating with a federal investigation of two men accused of participating in the funds diversion.

Kaiser and his business partner Larry Wells operated Quivira Ventures, a venture capital firm, the U.S. attorney said. Wells’ son Jeffrey, a senior treasury analyst at SureWest Communications, transferred as much as $25 million from SureWest accounts to Quivira without authorization, prosecutors said.

Quivira returned $23 million of the $25 million.

The remainder was transferred by Kaiser and his partner to a Luxembourg bank and hasn’t been recovered, the U.S. attorney said.

“The purpose of these transfers was so that Quivira could demonstrate to potential investors that it had sufficient funds on deposit to be a venture capital firm and thereby qualify for funding proposals,” the U.S. attorney’s office said in a statement.

Matthew Jacobs, Kaiser’s attorney, couldn’t be reached for comment.

Larry Wells and his son have been charged with wire fraud, money laundering and conspiracy in connection with the misappropriated funds.

William Portanova, Larry Wells’ attorney, said his client pleaded not guilty. Wayne Ordos, Jeffrey Wells’ lawyer, didn’t return a phone call.

There was no response from Roseville, Calif.-based SureWest.

Kaiser resigned from the board of Oakland-based Kaiser Permanente on Feb. 6, said Matthew Schiffgens, a spokesman for the HMO. He is to be sentenced July 27. The maximum penalty for the charges is 20 years in prison.