A British citizen, Island resident and the former CEO of a bankrupt software company pleaded guilty to wire fraud last week after he was accused of swindling about $50 million from investors.

Paul Johnston, 40, the co-founder and CEO of software company Entellium Corp., will be sentenced on March 13 and is facing a likely prison term of 3.5 to 4.5 years and a fine of $250,000. The maximum sentence for wire fraud is 20 years.

Johnston was arrested in early October at his South-end home off of West Mercer Way, where he lived with his wife. Johnston purchased his Island home in March 2006 for $1.1 million. Its appraised value is $1.4 million.

Johnston and the former CFO of Entellium were arrested for keeping two sets of accounting books. One book kept inflated revenues used to lure investors, and the other accounting book detailed the real company earnings.

Following their arrests, the company filed for bankruptcy and was up for bid with a California-based software maker looking to purchase it for a fraction of its previous value.

Johnston has remained in jail, as a judge denied his bail request because he was considered a flight risk, given his British citizenship.

Both of the accused abruptly resigned about a week before they were arrested. The fraud became apparent after an employee in the human resources department found the falsified record books while cleaning the desk of another executive on Sept. 26. Four days later, both quit.