RealTime IT News

Feds Hit Former Brocade Execs With New Charges

The Department of Justice has filed new securities-related fraud charges against former Brocade officials already under indictment for violating securities laws.

The new indictment against former Brocade CEO Gregory Reyes, and Stephanie Jensen, the former vice president of human resources, includes four counts of making false statements to accountants, three counts of making false SEC filings, two counts of mail fraud, as well as conspiracy and other charges.

The indictment describes how Brocade officials allegedly backdated employment offer letters and personnel records in order to make the back-dated stock options jibe with when the employees were supposed to have been hired.

The DoJ claims that executives at the computer gear maker perpetrated this fraud in order to attract qualified personnel with stock option grants that had lower valuations and could thus be exercised at higher profit.

The charges were filed by Kevin Ryan, U.S. Attorney for the Northern District of California.

Richard Marmaro, the lead attorney for Reyes, said in response to the charges that the Feds have failed to uncover a single document incriminating his client.

"We have reviewed more than 400,000 pages of material that Brocade supplied to the government, and not a single document suggests fraud," he said in a statement.

He added that documents do show that Brocade's option-grant paperwork was fraught with inadvertent errors made by employees in the company's HR and finance departments.

Reyes and Jensen face 20 years in prison and $5 million in fines for granting backdated stock options to employees between 2000 and 2004.

Former Brocade CFO Antonio Canova was also charged with knowing of the alleged fraud when he joined the company, and with failing to inform auditors.