‘Seriously Misleading’ Affidavit Leads to Longer Sentence for Ex-Brocade CEO

Sentencing

‘Seriously Misleading’ Affidavit Leads to Longer Sentence for Ex-Brocade CEO

Posted Jan 17, 2008, 09:08 am CDT
By Debra Cassens Weiss

A federal judge said yesterday he lengthened the sentence for the ex-CEO of Brocade Communications because he submitted a misleading affidavit.

U.S. District Judge Charles Breyer of San Francisco added six months to Gregory Reyes' sentence for backdating stock options because of the “seriously misleading” declaration, making the total sentence 21 months in prison, the Recorder reports.

Reyes' attorney, Richard Marmaro, said the affidavit was the result of “poor drafting by the lawyers” and was not intended to apply to disputed stock option grants, the story says.

The affidavit by Reyes said he told the company's former human resources chief that he set stock options dates based on the date he decided to grant them rather than earlier look-back dates, a position contradicted at his trial, according to the White Collar Crime Prof Blog. The document was submitted in support of a motion for a separate trial by the former HR chief, Stephanie Jensen. Breyer said the declaration wrongfully suggested that Reyes would provide exculpatory evidence on Jensen’s behalf.

The White Collar Crime Prof Blog identifies this as the key statement that raised Breyer’s ire:

"I told Ms. Jensen that the options grant dates were the dates that I made the granting decisions. Options were priced at the fair market value on the grant dates."

The blog says Breyer “obviously was perturbed by the affidavit because it led him to conduct two trials rather than one.”

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