Former McAfee Exec. Facing Options Charges

McAfee’s former general counsel is facing a seven-count federal fraud indictment over stock option grants in 2000 and 2002.

If convicted on the charges, Kent Roberts, 50, could receive 20 years in prison and a $250,000 fine for mail fraud, wire fraud and for filing false documents with the Securities and Exchange Commission (SEC).

A federal grand jury indictment, announced yesterday, charged Roberts with “devising a scheme to defraud” by granting himself and others within Network Associates (now McAfee) stock options in 2000 and 2002, according to the U.S. Attorney’s office in the Northen District of California.

“It is integral to the public trust in our financial markets that
transactions affecting a company’s financials are recorded honestly,
particularly by those who are responsible for regulatory compliance,” U.S.
Attorney Scott Schools said in a statement.

Roberts is expected to appear in court Thursday to answer the charges, Justice Department
spokesperson Luke Macaulay told

McAfee had no comment.

The security software company dismissed Roberts in May of last year amid an accounting probe. In January of last year, McAfee also agreed to pay a $50 million penalty to settle improper accounting probes with federal regulators. It also announced CEO George Samenuk’s early retirement as part of the probe.

Roberts allegedly concealed the option changes, recommending in 2002 the
removal of the then-controller who assisted the stock grant exercise date
change the indictment claims. In an ironic twist on the story, Roberts was one of the three
founding members of the company’s Ethics First Committee.

According to yesterday’s indictment, federal regulators charge that Roberts changed the grant date and price on an option to buy 20,000 shares of Network Associates’ stock in 2000.
Roberts had the then-controller change the grant price from $29.62 to $19.75
and the date from Feb. 14, 2000 to Apr. 14, 2000, the indictment claims.

The former McAfee general counsel, while leading an investigation into the
then-controller’s conduct and the reporting to the SEC, didn’t tell Network
Associates’ management, board, auditors and others about the supposed fraud,
the charges said.

Roberts also allegedly falsified an entry in Network Associates’ board minutes in 2002, indicating the then-CEO and chairman was granted an option to buy 420,000 shares a day later than he actually was. The change allowed the then-CEO to purchase the shares at a lower price.

The charges against Roberts are the latest among a growing list of charges hitting companies and former executives over stock option backdating practices.

Last week, Myron Olesnyckyj, former general counsel of online job site, pleaded guilty to securities fraud and conspiracy regarding stock backdating between 1996 and 2003,
according to the U.S. Attorney for the Southern District of New York. If convicted, he could face up to 25 years in prison.

Olesnyckyj was fired in 2006.

Two ex-Brocade Communications execs were also charged in 2006 as part of the widening stock options scandal.

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