9th Circuit Tosses Conviction of Brocade Ex-CEO, Cites Prosecutor Misconduct
A federal appeals court has overturned the backdating conviction of the former CEO of Brocade Communications, saying the trial of Gregory Reyes was tainted by a prosecutor’s untrue statement to the jury.
The San Francisco-based 9th U.S. Circuit Court of Appeals ruled today, tossing Reyes’ 21-month sentence for backdating stock options and ordering a new trial, the San Jose Mercury News reports.
The newspaper calls the ruling “a sharp rebuke to the federal government in its signature prosecution arising from the scandal over the rigging of stock options in Silicon Valley.”
In his defense, Reyes had asserted he relied on his company’s finance department to make sure corporate books were accurate. But in closing arguments the prosecutor said finance employees “don’t have any idea” that backdating was occurring.
The Recorder identifies the prosecutor as Assistant U.S. Attorney Adam Reeves.
The prosecutor’s statement was at odds with statements to the FBI by finance employees who described knowledge of the backdating scheme, the court said in its opinion (PDF). That evidence was never presented to the jury; instead the government relied on the testimony of a finance employee who said she didn’t know about the backdating scheme.
“The record demonstrates that the prosecution argued to the jury material facts that the prosecution knew were false, or at the very least had strong reason to doubt,” the opinion (PDF) said. “Deliberate false statements by those privileged to represent the United States harm the trial process and the integrity of our prosecutorial system. We do not lightly tolerate a prosecutor asserting as a fact to the jury something known to be untrue or, at the very least, that the prosecution had very strong reason to doubt. … There is no reason to tolerate such misconduct here.”
The appeals court upheld the conviction of former Brocade human resources chief Stephanie Jensen, but overturned her sentence.
Reyes was represented on appeal by WilmerHale partner Seth Waxman, a former U.S. solicitor general.
