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Cogent Communications Faces Federal Scrutiny Over Fraudulent Acquisition and 22-Year Corporate Cover-Up

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"Exhibit 2.5 isn't a footnote — it's the foundation of a 22-year fraud," says whistleblower David J. Koch, who will attend Cogent's May 8 earnings call.

WASHINGTON - TelAve -- By Fiber Network Solutions, Inc.

Just days before its Q1 2025 earnings call, a federal whistleblower has released explosive allegations of securities fraud, obstruction of justice, and racketeering related to Cogent Communications' 2003 acquisition of Fiber Network Solutions, Inc.

The 160-page whistleblower report — now in the hands of the U.S. Attorney — names Cogent officers, board members, and legal counsel, and details a 22-year cover-up involving multiple criminal predicate acts.

As Cogent Communications Holdings, Inc. prepares to announce its Q1 2025 earnings on May 8, one of its earliest — and most deliberately concealed — acquisitions is now the subject of active federal scrutiny.

David J. Koch, former CEO and co-founder of Fiber Network Solutions, Inc. (FNSI), is calling on analysts, investors, and regulators to demand answers about Exhibit 2.5 — a buried document originally submitted with Cogent's S-1 registration statement, where it appeared as an unindexed exhibit labeled only as "miscellaneous assets."

"The acquisition of my company — twice recognized on the Inc. 500 list of America's fastest growing companies — took place while I was medically incapacitated," said Koch. "That was not a 'miscellaneous asset.'"

"Exhibit 2.5 isn't just redacted — it's missing. Entirely. Every payment schedule. Every liability assumption. Every equity release," Koch said.

"I was the co-founder, president, CEO, board chairman, and majority shareholder — stripped of my voting rights while under medical incapacity. Removed by a terminated attorney acting without authority. Now the truth is coming out — and it cuts to the foundation of Cogent's early expansion."

SEC Source Document: Exhibit 2.5 – Original Filing (SEC Archive)

"The proxy authored by William J. Kelly — an attorney terminated for cause three years earlier — was designed to defraud a medically incapacitated founder," Koch stated. "Exhibit 2.5 operationalized and concealed that fraud. That didn't happen by coincidence — it was coordinated participation between conspirators inside my company and inside Cogent."

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"The proxy and Exhibit 2.5 are the bookends of a fraud that formed the foundation of Cogent's entire business model. Kyle Bacon, the architect of the scheme, confesses as much — on a recorded call."

WHY EXHIBIT 2.5 MATTERS NOW:
  • All critical schedules — including payment terms, liabilities, and stock allocations — were marked "omitted" in Cogent's S-1 filings.
  • The proxy vote enabling the transaction was drafted by an attorney terminated for ethical violations — without board or shareholder consent.
  • No shareholder disclosures, fairness opinions, or press releases accompanied the deal.
  • Federal agencies — including the FBI, IRS Criminal Investigation, and the SEC — are now actively reviewing whistleblower evidence related to the acquisition.

KEY QUESTIONS FOR COGENT'S MAY 8 EARNINGS CALL:

Exhibit 2.5 and FNSI Acquisition:
  • Why were all financial schedules related to the FNSI acquisition omitted from Cogent's SEC filings?
  • Who personally benefited from the FNSI acquisition — and where are the proceeds?
  • Was the transaction board-approved, independently valued, or subjected to any legal or regulatory review?

GOVERNANCE AND DISCLOSURE FAILURES:
  • Why was no press release, shareholder memorandum, or public filing issued disclosing the FNSI acquisition?
  • Why was a terminated attorney — removed for cause — permitted to author and submit voting instruments without disclosing his status?

DIVIDEND SUSTAINABILITY AND FINANCIAL RISK:
  • Why is Cogent paying a $1.005 quarterly dividend — totaling $4.02 annually — while reporting just $0.69 in earnings per share (TTM)?
  • That equates to a dividend payout ratio of 582.61% — an unsustainable figure that would alarm any credible analyst.
  • Is Cogent using excessive dividends to prop up its stock price while concealing unresolved legal, governance, and acquisition exposure?

"You don't pay out nearly six times your earnings unless you're hiding something — or trying to buy silence," Koch added.

REGULATORY RISK AND FEDERAL INVESTIGATION:
  • Has Cogent received subpoenas, inquiries, or requests for information from federal agencies related to the FNSI acquisition?
  • Has the company disclosed whistleblower-related risks, ongoing investigations, or potential liabilities in its SEC filings?

EXECUTIVE CONDUCT AND CRIMINAL EXPOSURE:
  • Was Cogent aware that the central figure behind the fraudulent transfer of FNSI — later employed as its Chief Information Officer, Kyle Bacon — had openly discussed evading U.S. taxes, laundering assets through cryptocurrency, and concealing offshore income?
  • Why did Cogent retain or elevate an executive who, in recorded phone calls now in the hands of IRS-CI, boasted of hiding millions in Bitcoin, paying yacht staff in crypto, and renouncing his U.S. tax obligations?
  • Has Cogent disclosed the reputational, legal, or financial risks associated with Mr. Bacon's conduct — now cited in IRS, SEC, and FBI whistleblower filings?

"They climbed in bed with him. They gave him the keys to the company's IT infrastructure," Koch said. "And now he's on tape — bragging about tax evasion, concealing assets, disappearing offshore — and specifically naming Dave Schaeffer as participating in the implementation of Fiber Network Solutions' intellectual property and trade secrets to form the very foundation that built Cogent into what it is today."

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"Cogent's board can't plead ignorance. At this point, silence is complicity."

Whistleblower Recordings and IRS-CI Submissions The Fraud Explained – Full Chronology and Evidence

KOCH'S FINAL WARNING:

"If the board doesn't acknowledge this, it's not just a business risk — it's a breach of fiduciary duty. Shareholders deserve answers. Regulators demand accountability. And federal prosecutors are watching."

SUPPORTING DOCUMENTATION AVAILABLE UPON REQUEST:
  • Audio recordings of Kyle Bacon discussing the FNSI transaction and concealment strategies.
  • Metadata audit of the fraudulent proxy document authored by William J. Kelly.
  • Whistleblower filings submitted to the IRS, SEC, and FBI detailing material omissions and fraud.
  • Server logs confirming attempted cyber intrusions targeting public disclosures.

⸻

Media Contact / Source Verification:

David J. Koch
Federal Whistleblower – FNSI Fraud Disclosure Case
Email: dave@FiberNetworkSolutions.net
Phone: (614) 364-4085 (Kindly text or email first)

David J. Koch has confirmed that he will attend Cogent's May 8, 2025 earnings call.

⸻

FORWARD-LOOKING STATEMENT AND LEGAL DISCLAIMER

This release includes references to public records, whistleblower submissions, and documented evidence filed with multiple federal agencies. All individuals named are presumed innocent unless and until proven guilty in a court of law.
Statements reflect the firsthand knowledge and good-faith belief of whistleblower David J. Koch as of May 5, 2025, and may be updated as additional facts emerge or investigations proceed.



Source: Fiber Network Solutions, Inc.
Filed Under: Telecom
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