Gowex CEO slapped with €600,000 bail

High Court Judge Santiago Pedraz has granted conditional bail to disgraced businessman Jenaro García, the founder of free wi-fi company Gowex. García will have 15 days to post bail of €600,000 in cash if he wants to avoid being sent to jail. Judge Pedraz imposed these measures after the former CEO of Gowex appeared in court on Monday morning, although he did not submit to the prosecutor’s request for García’s passport to be confiscated.

In his writ, the judge said that he considered the bail amount to be proportional given that García has a bank account in Luxembourg with more than €3 million, in the name of one of the companies he controls.

According to judicial sources, García admitted in court this morning cooking the company books at Gowex thanks to fake invoices, sent to companies that he himself had created. He has also supplied the judge with new documents relating to the case.

García has already publicly admitted that he had been presenting fictitious financial accounts for Gowex over at least the last four years.

García said he was ready to face the consequences and cooperate with the justice system

Previously hailed as a role model for Spanish entrepreneurs, García resigned after Gowex shares lost 60 percent – and nearly €870 million – in market value on the back of a report by a mysterious US analysis firm claiming that 90 percent of Gowex’s sales were nonexistent.

Jenaro García began answering Judge Santiago Pedraz’s questions shortly after 10.30am. Two associations and one individual are acting as the private prosecution, but were not present due to formal errors in their written statements that need to be corrected.

García is being investigated for three possible crimes in connection with falsifying company accounts, distorting the consumer market and abusing relevant information. These crimes could mean up to 13 years in prison, although García’s early confession could bring the final conviction down to about a quarter of that.

In early July, García said through his Twitter account that he had “voluntarily” confessed and that he was ready to face the consequences and cooperate with the justice system.

Gowex, which installed free wi-fi spots in public areas such as streets and mass transit stations, was worth as much as €1.4 billion before the report by Gotham City Research. It has since emerged that the latter firm is owned by Daniel Yu, a short seller who makes a profit by borrowing company shares, selling them, bringing the price down through the release of negative research and repurchasing them at a lower quote. Yu told Bloomberg that, like Batman, he is after the bad guys.

In a corporate release issued a few days ago in the alternative stock market (MAB), Gowex said that García had resigned after admitting that the official financial statements of the last four years “were not an accurate reflection” of the company’s reality. On July 10, Gowex said it had filed for preliminary insolvency.