I've long been warning investors to watch out for Pegasus Wireless (OTC BB: PGSW.OB) and especially its questionable management under serial penny-stock operators CEO Jasper "Jay" Knabb and CFO Stephen Durland. Knabb long denied the crash and burn of the Grand Bahamas "manufacturing" facility, even while the local press reported on it, but the company has now admitted to it in an SEC filing.

More interesting is the plan, also detailed in the preliminary proxy, to split the remainder of Pegasus into three separately publicly traded companies, none of which Knabb or Durland would run. And by interesting, I mean suspicious. It looks to me like yet another attempt to hide the wreckage -- similar to Knabb's delisting the stock and changing the ticker symbol. Moreover, I heard about this plan long before the filing, which goes to show you that there are plenty of loose lips at Pegasus.

The stock of the whole entity, which is worth about a dime a share these days, is still the kind of toxic sludge that no investor in his or her right mind would ever touch. That's why it's worth remembering that Knabb -- who still apparently claims to have invented Wi-Fi -- was able to pump this near-worthless company to better than $80 a share and a billion-dollar valuation, back when it traded on the Nasdaq. Then, some people actually believed that Pegasus would beat Apple (NASDAQ:AAPL) and Cisco (NASDAQ:CSCO) with entertainment-networking gear. It didn't happen, of course, and to me, management's copious statements to the contrary look materially misleading.

As for Knabb and Durland -- who allegedly calls himself "Ferrari Steve," according to the source for that now-confirmed breakup rumor -- shareholders might just wonder: How could a company that burned so much cash be so good to management? Knabb's multimillion-dollar yacht is profiled in a recent magazine article (opens a PDF).

I wonder why the SEC, or other law-enforcement agencies, aren't even more curious about the money trail.

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At the time of publication, Seth Jayson had no positions in any company mentioned here. See his latest blog commentary here. View his stock holdings and Fool profile here. Fool rules are here.