As lawsuits mount, Sheriff ordered to secure computers at Entellium HQ

Entellium, whose top two executives were charged with wire fraud in early October, faces mounting litigation as it looks to sell its assets to financial software giant Intuit.

An executive recruiter, a Web site design firm, a computer equipment leasing company and an office furniture retailer have all sued the embattled Internet company for failing to pay its bills. In the case of CIT Communications Finance Corp., the King County Sheriff has been ordered to secure circuit boards, telephones and computer servers at the company's Seattle headquarters at 1010 Western Avenue.

"The Sheriff is hereby directed to break and enter a building or enclosure to obtain possession of the property if the property is concealed in such a building or enclosure," court documents say. That suit, filed in King County Superior Court on Oct. 31, alleges that Entellium failed to make equipment lease payments now totaling $102,436.

"Entellium has refused to respond to this document and unlawfully remains in possession of CIT's property," CIT's suit says.

In other cases, Fleischmann Office Interiors said it has not been paid since June 1. Fleischmann, which provided Entellium's office furniture for the past two years, said it is owed $16,653.

Despite repeated demands for payment, Seattle graphic and Web design firm Design Commission said in a lawsuit filed last month in King County Superior Court that it is owed $17,000. Design Commission was hired between April 2008 to June 2008 to work on a Web site under the name "Rave Migration Site."

Meanwhile, The Laurel Group -- a Seattle executive recruiting firm -- won a default judgment on Nov. 18 against Entellium in the amount of $37,986.

The lawsuits provide additional insight into the dire situation at Entellium, a high-flying Seattle company that raised more than $40 million in venture capital from Ignition Partners, Sigma Partners, West River Capital and others.

Entellium may soon file for bankruptcy, sell its assets or both. TechFlash reported last night that Intuit -- maker of QuickBooks, Turbo Tax and other financial software products  -- had offered to purchase the assets of Entellium. That sale may be accompanied with a bankruptcy filing, sources say.

Acting Chief Executive Charles Miller -- who was thrust into the leadership position after Paul Johnston and Parrish Jones were arrested for inflating revenue at the company -- declined to comment on the status of Entellium in an interview Friday.

But he did indicate that more information would be available this week.

The deterioration of the company -- once named by a local magazine as one of Seattle's best places to work -- has captivated the tight-knit Seattle technology industry. Its demise also has stirred debate in part because of revelations that audits were never completed, a simple procedure that some say would have easily identified the alleged fraud. Federal prosecutors have argued that Johnston -- who remains in prison awaiting indictment -- falsified financial records and used the company as a "personal piggy bank."

Most of Entellium's staff was let go in early October, with no severance or vacation time paid. (Related post: Ex-Entellium worker sues for severance.)