Exobox Technologies Corp (EXBX)

[FunkyCoolModena]

Any of this sound familiar? Backdating the issuance of stock by an insider is a crime in my opinion.

Gregory Reyes (born September 1, 1962) is an American businessman who most recently served as the Chief Executive Officer (CEO) for Brocade Communications. He is the first person to have been convicted for fraudulent backdating of corporate stock options.

In June 2005, Brocade announced that the U.S. Securities and Exchange Commission had undertaken an investigation into the company stock option accounting. In August 2006, the U.S. government indicted Reyes on 12 counts of securities fraud, two of which were later dropped.

Reyes's trial began on June 18, 2007, making it the first criminal trial in which a backdating prosecution was considered before a jury.

In the trial, Reyes stated that he had no intent to deceive anyone, and that his decisions relied largely in good faith on the accuracy of documentation provided by Brocade's finance department, which incorrectly accounted for stock options in Brocade's financial statements that he signed in good faith and with the belief that they had been properly accounted for.

Elizabeth Moore, a key witness to Reyes's conviction and the only employee of Brocade’s finance department to be called during the proceedings, testified that neither she nor any other members of the finance department had any knowledge of backdating or fraudulent occurrences within the organization. After the trial’s conclusion, however, Moore recanted her testimony, claiming that she had been bullied and pressured by the prosecution to give false testimony. In a letter to Fortune Magazine she told an editor that she, as well as other high-ranking members of the finance department, had been aware of the practice of backdating stock options to rank-and-file employees.

Moore's conflicting statements were not disclosed during the trial, and prosecutor Adam Reeves made numerous statements to the jury using Moore's testimony to support his argument that Reyes had deceived Brocade’s finance department; he presented a diagram to illustrate that no one in the finance department was aware of the backdating; he made statements in his closing arguments claiming that employees of the finance department did not have any idea that the backdating had occurred, adding that the government’s theory, based on their investigational findings, supported this conclusion.

Reyes filed a motion for a new trial on the grounds of prosecutorial misconduct, which was denied by the district court On January 16, 2008, Reyes was found guilty of 10 counts of fraud and conspiracy, including falsifying corporate accounting books and records, and participating in a stock options backdating scheme. Reyes was sentenced to 21 months in prison in addition to a $15 million fine, making him the first executive to be convicted of the concealment of stock options backdating.

On August 11, 2007 Reyes' was convicted on 10 counts of illegally backdating stock options while serving as CEO of Brocade. In January 2008, he was sentenced to 21 months in prison and received a $15 million fine. U.S. District Judge Charles R. Breyer, the sentencing judge, refused to grant the defense request for a sentence of no more than 13 months, to be served in a halfway house rather than prison.


https://en.wikipedia.org/wiki/Gregory_Reyes