Former Entellium Chief Executive Paul Johnston pleaded guilty to one charge of wire fraud Thursday afternoon under an agreement with federal prosecutors that will, if approved, resolve the outstanding allegations against him.

Johnston, 40, is expected to be sentenced to between 4 and 5 years in prison under terms of the agreement. Sentencing is scheduled for March 13 in U.S. District Court in Seattle. Johnston is slated to remain in custody until then. A native of the UK, Johnston is likely to be deported after serving out the sentence, said Carl Blackstone, the prosecuting attorney on the case.

“Mr Johnston was very cooperative, very reasonable, and he’s very remorseful,” said prosecutor Blackstone.

Johnston and former Entellium finance chief Parrish Jones are alleged to have kept two sets of books at the Seattle maker of customer-relationship management software. Prosecutors say they showed one set to the board and kept the real numbers to themselves until an employee found the falsified records in a desk at the company’s headquarters.

In federal court today, Johnston smiled and shook the hand of his attorney, Robert Gombiner, at the conclusion of the proceedings in front of Magistrate Judge James Donohue. Dressed in prison garb, Johnston was led out of a separate exit and did not speak to reporters. His attorney declined to comment afterward.

Jones is also expected to enter a plea agreement on the charges against him. Blackstone said the case is winding down.

“Mr. Johnston appeared to be -- with the exception of lying about revenue -- a respected businessman, and he was trying to make the company successful,” Blackstone said.

In addition to the prison sentence, Johnston is expected to be ordered to pay back as much $2.5 million in restitution.

On the falsified books, Johnston and Jones showed revenue of $15.4 million between 2006 and 2008 when, in fact, it was $3.7 million, prosecutors say. Entellium filed for bankruptcy last week and is attempting to sell its assets to Intuit. Entellium was backed with more than $45 million in venture financing from Ignition Partners, Sigma Partners and others. Ignition had invested $19 million.

UPDATE: In an interview after the proceedings, Blackstone said that the case was interesting in part because it was difficult to determine the true loss amount created by the fraud. Even with the false revenue figures, Blackstone said the company was losing $1 million a month. He said it would have been difficult to pin the $50 million or so invested in the company  on Johnston because there was a real business there.

Ignition continued to invest even with the losses, though Blackstone believed the false revenue figures led the Bellevue venture capital firm to invest more money.

At the end of the day, Blackstone said the restitution amount was determined by how much Johnston enriched himself during the course of the fraud through loans, salary and credit card purchases.

Compared to past court proceedings, Johnston appeared more upbeat today. Asked by Judge Donohue whether he was entering the agreement on his own accord, Johnston said "completely." Asked if he had been influenced to enter the plea by anyone, Johnston added that it was "solely my decision."

As a next step, a probation officer will create a pre-sentencing document with recommendations for the judge. It is up to the judge to impose a sentence which could or could not fall within the recommended guidelines. The maximum penalty is 20 years in prison, a $250,000 fine and supervised release for five years.