Financial software giant Intuit has entered into an agreement to gobble up the assets of Entellium, the troubled Seattle Internet startup whose former CEO is in federal prison awaiting trial on wire fraud charges.

The deal has not been formally approved, but Intuit spokeswoman Diane Carlini confirmed Sunday night in an interview with TechFlash that the company is pursuing an asset purchase. "We have made an offer for certain assets," said Carlini. She did not have any details on the purchase price, though one source who spoke to TechFlash put the figure at about $8 million.

That is well  below the more than $40 million that Entellium raised from top venture firms such as Ignition Partners, Intel Capital and Sigma Partners.

The asset sale is the latest twist in the ongoing saga of Entellium, which has imploded in the past two months after top executives Parrish Jones and Paul Johnston were arrested on wire fraud charges for inflating revenues over a number of years.

In an interview Friday, acting Entellium CEO Charles Miller declined to comment on speculation that the company would be sold or file for bankruptcy. However, he indicated that news was coming, telling this reporter to check back later this week.

The asset purchase could add fuel to Intuit's attempts to compete in the hosted customer relationship management sector against the likes of Salesforce.com and Microsoft. Intuit made a push into that arena in September with the launch of a new offering that complemented its QuickBooks financial accounting product. (Ironically, financial accounting has become a hot button issue in the Entellium case since we reported that audits were never completed at the company.)

An executive for Intuit told Computerworld at the time of the new product launch that its hosted-CRM product would "be between one-third to one-tenth the price when you consider total cost of ownership." Entellium often made claims that its product was cheaper than the competition.

It was unclear how Intuit would implement Entellium's product, with Carlini declining to comment on that topic. But a source with knowledge of the situation called the match-up of Entellium and Intuit "a good fit."

What also is unclear is how Intuit will shield itself from the litigation that is mounting against Entellium. A former employee recently sued the company over his lack of severance package. [See related story from today]. Other litigation also has been filed. [More on that later.]

Some have speculated that as part of the asset sale, Entellium will file for Chapter 11 bankruptcy protection. One former employee who lost his job in the Oct. 3 layoff said he hopes the proposed asset sale indicates that laid off workers will get some sort of payment.

"To me, the right thing to do is go back and pay severance to the employees," said the former sales worker who asked that his name not be used. He also wondered if the skeleton crew of employees who remained with Entellium for the past two months will collect severance packages.

An asset sale to a corporation of Intuit's size -- it expects revenue to top $3.2 billion next year -- should provide some comfort to Entellium's remaining customers. Several rivals of Entellium emerged in recent weeks with deals to poach customers.