Former Silicon Valley executive goes on trial
By Julia Cheever
November 26, 2007
The second federal criminal case to go to trial in San Francisco
in connection with a nationwide stock options backdating probe
is scheduled to begin today.
Stephanie Jensen, 49, of Los Altos, a former vice president of
human resources of San Jose-based Brocade Communications Systems
Inc., faces one count of conspiracy to falsify company books and
one count of falsifying books.
A jury in the court of U.S. District Judge Charles Breyer is
slated to hear opening statements this morning.
The 12 jurors and four alternates were selected last week.
The first case to go to trial was that of Gregory Reyes, 44,
of Saratoga, the former chief executive officer of the data networking
Reyes was convicted in Breyer's court in September of 10 counts
of securities fraud, conspiracy to commit fraud and making false
statements in company records and to accountants in connection
with the backdating of stock options offered to company employees.
Jensen and Reyes were indicted together last year but their trials
were made separate. Reyes's sentencing has been postponed until
after Jensen's trial.
Jensen was originally accused of a total of eight counts including
securities fraud, but prosecutors later narrowed the case substantially
by dismissing six of the counts.
Prosecutors allege in a pretrial memorandum filed with Breyer
on Oct. 31 that the two remaining counts against Jensen relate
to a program by Jensen and Reyes to backdate stock options that
the company used as compensation to attract and retain employees.
Backdating is the practice of changing the date on a stock option
so that an employee can buy shares at a lower price and thus a
greater profit. Backdating itself is not illegal, but it is a
crime to fail to disclose it as a compensation expense in company
Reyes was the sole member of the Brocade board of directors'
compensation committee. The prosecution document alleges that
Jensen "oversaw and directed the process by which the earlier
date was selected, presented to Reyes and recorded in the company's
Jensen has pleaded not guilty to the charges.
The U.S. Justice Department and U.S. Securities and Exchange
Commission have investigated several dozen corporations nationwide
in the backdating probe. Prosecutors said this fall that criminal
charges have been filed in a "handful" of cases around
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