Children's software exec jailed for fraud

The founder of two children's videogame companies has been convicted of bank fraud and has been sentenced to more than two years in prison, despite pleading for a delay in sentencing.

Shelley Day, co-founder of Humungous Entertainment and founder of Hulabee Entertainment, was convicted of defrauding the Asia Europe Americas Bank of Seattle, falsely obtaining more than USD 1.5 million in bank loans.

In March 2002, Day approached the bank for a loan, claiming that a portion of Hulabee Entertainment would be sold to Disney Interactive for USD 2.5 million and producing a falsified 'letter of intent' for the sale.

After securing the initial loan and several further sums, Day ceased making payments. When questioned, she claimed that Disney Interactive had been sold to Vivendi Universal - thereby delaying the Hulabee sale - and once again presented falsified documents to support the claims. She asked the bank not to contact either company, lest it damage the finalisation of the alleged deal.

The fraud was uncovered a year later, when a lawyer representing the bank contacted Disney Interactive and found the entire story had been fabricated by Day, apparently to secure financing to purchase her USD 3 million dream home.

In issuing the 30 month prison sentence, US District Judge Thomas S. Zilly referred to Day as a "sophisticated, educated person setting out to defraud anyone to reach her goals.'' The judge refused Day's request to delay sentencing until April next year, on the basis that Hulabee had several games in development that could still turn a profit. Judge Zilly said that Day's justification for delaying the sentence was too reminiscent of the lies she had told the bank.

Day was a co-founder of Humungous Entertainment, established in 1992 and later sold to Infogrames-owned GT Interactive in 1995. In 2001, Day left Humungous and took the bulk of the staff with her to establish Hulabee Entertainment. Although the children's software publisher's website is still active, its business licence expired in August 2003.