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Former Gizmondo executive's mafia convictions revealed

Wed 26 Oct 2005 5:05pm GMT / 1:05pm EDT / 10:05am PDT

A senior executive at handheld console firm Gizmondo who resigned last week along with former boss Carl Freer had a number of convictions for involvement in a Swedish mafia group, as did two other Gizmondo staff.

A senior executive at handheld console firm Gizmondo who resigned last week along with former boss Carl Freer had a number of convictions for involvement in a Swedish mafia group, as did two other Gizmondo staff.

Stefan Eriksson was an executive officer of Gizmondo Europe, and earned over $3 million in salary and bonuses from the company (along with a generous $100,000 vehicle allowance) before his resignation on October 20th.

However, Swedish daily newspaper Aftonbladet has revealed that in two trials in 1993 and 1994, Eriksson was convicted of a number of mobster-related charges, including financial fraud related to counterfeit money and an attempted $3m scam on a financial institution, and sentenced to over ten years in prison.

Eriksson was at the time considered to be the brains behind an operation referred to in the media as the Uppsala Mafia after the large town in Sweden where the group operated, and where, interestingly, Gizmondo now operates its Swedish office.

Two other Gizmondo staff members - who are also believed to have resigned last week - also had convictions for their involvement in this group, including Johan Enander, described as the Uppsala Mafia's "Torpedo", who was a debt collector for the group and was convicted of blackmail and assault. He was latterly employed as Gizmondo's "head of security".

Eriksson's connections to Gizmondo don't stop at his own employment for the firm, however; he is also a co-owner of Northern Lights, a development company which was paid $3.5 million by Gizmondo for its assistance in developing software titles Chicane and Colours - titles which were officially developed by Indie Studios and Warthog.

The other co-owner of Northern Lights is Carl Freer, the Gizmondo Europe managing director who also resigned his position on October 20th (but like Eriksson, retains stock in the company), claiming that it's now past the start-up position where his entrepreneurial skills can be of use. Both he and Eriksson claim that they will now pursue new entrepreneurial ventures.

At the end of last month, Freer paid $3.5 million back to Gizmondo, stating that it was a temporary move to "avoid any appearance of impropriety"; however, the company's 10-K regulatory filing with the Securities and Exchange Commission suggests that over $21 million is owed by the company to Freer and Eriksson, on the basis that the executives loaned this cash to the firm on a short-term basis.

The day before Freer repaid the $3.5 million sum, the 10-K form reveals, the board of Gizmondo formed an independent committee to look into a number of transactions approved by Freer and Eriksson in which they may have had a personal interest.

In the wake of their departure, Michael Carrender - who is now CEO, CFO and chairman of the board of Gizmondo - told Aftonbladet that he was not aware of Eriksson's connections with the mafia, and claimed that an independent counsel will now be appointed to look into any possible irregularities in the company's transactions.

The Gizmondo console launched in the United States last weekend, to what the company claims was an "enthusiastic reception" from US consumers. Twelve shopping mall kiosks around the country are selling the console, along with the official website, and a further 38 kiosks are planned for the coming weeks.

Tiger Telematics, Gizmondo's parent company, plans to begin trading its stock on the NASDAQ exchange in the near future. The firm reported an loss of $99.29 million in the year leading up to the launch of the Gizmondo, and expects an operating loss of $210 million in the first six months of 2005.

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