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Judge Says ‘Heads Have to Roll’ Over Late-Disclosed McAfee E-Mails

Posted Sep 18, 2008 6:44 AM CDT
By Debra Cassens Weiss

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A San Francisco federal judge is demanding that lawyers for McAfee Inc. appear at a hearing today to explain why 18 pages of corporate e-mails weren’t disclosed until the eve of the backdating trial of the company’s former general counsel.

The e-mails were turned over at 10:40 p.m. Tuesday after the prosecution asked for travel records for the company’s former controller, the Recorder reports. Assistant U.S. Attorney Laurel Beeler said the documents were subpoenaed two years ago.

U.S. District Judge Marilyn Hall Patel ordered in-house lawyers from McAfee to show up at the hearing along with lawyers from Howrey and Wilson Sonsini Goodrich Rosati. Howrey conducted the company’s internal backdating investigation and Wilson Sonsini represents McAfee.

"Heads will have to roll, because this is outrageous," Patel said.

Ex-general counsel Kent Roberts is accused of backdating stock options beginning in 2000, the Wall Street Journal reports in its story on the flap (sub. req.). Roberts claims in his defense that he relied on the controller, Terry Davis, in backdating stock options grants.

Roberts’ lawyer, Stephen Neal of Cooley Godward Kronish, says the e-mails show Davis was extensively involved in changing a stock options grant Roberts received in 2000. However Beeler said the documents could also aid the prosecution because they provide more detail about the context of Roberts’ grant.

McAfee issued a statement saying the company “is as surprised as anyone by this turn of events."

"We reviewed literally terabytes of data, and responded with extensive document production," the statement said. "It is our policy to comply fully with any document request. We have continued to respond promptly to all subsequent requests, and when documents were discovered this week, we immediately produced them."

Neal argued that the failure to turn over the e-mails is part of an effort by McAfee to pin the blame on Roberts and avoid paying his legal fees, the Daily Journal reports. (sub. req.). He said it "defies credibility" to say the e-mails were not withheld intentionally.

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