Former Brocade CEO Greg Reyes on Thursday was sentenced to an 18-month prison term and ordered to pay $15 million for his role in stock options backdating while at Brocade.
Reyes was convicted in 2007 of misleading stockholders and the government about the value of Brocade stock options, and originally received a 21-month prison sentence. His conviction was overturned in 2009 by the San Francisco-based 9th U.S. Circuit Court of Appeals, however, on grounds that prosecutors had falsely told a jury that Brocade's financial officers were unaware of the backdating, and a new trial was ordered.
The central argument in Reyes' defense in the second trial was that Wilson Sonsini Goodrich Rosati, Brocade's outside counsel at the time the backdating was said to have occurred, was the entity that signed off on the backdating and that Reyes was improperly advised. Reyes, in his first trial, admitted to signing inaccurate reports but denied any wrongdoing, saying he had relied on that advice.
But Judge Charles Breyer according to a report on the trial's end in California legal newspaper The Recorder, said Reyes had to take responsibility.
"We're not dealing with someone, in this case especially, who is unsophisticated and can't understand the words he writes," Breyer said.
Reyes has been ordered to turn himself in by Sept. 10.
"I think at some point individuals have to stand up and take responsibility for what they say or do, or remain silent," the judge added.
Reyes stepped down from Brocade in January 2005, and Reyes and other ex-Brocade executives were first charged with securities fraud and backdating activities in 2006, following a restatement by Brocade of some $300 million in earnings over a five-year period.
Judge Breyer rejected prosecutors' motions seeking $137 million and a 37-month sentence for Reyes.
According to The Recorder, Reyes broke down in tears when it was time for him to address Judge Breyer. Reading a prepared statement for him, Reyes' lawyer, Stephen Neal of Cooley LLP, said on Reyes behalf, "I am a shell of the man I once was."
According to reports, Judge Breyer received more than 400 letters on Reyes' behalf from family, friends and other supporters. Breyer said he was moved by the support for Reyes but reportedly told the court, "white-collar defendants, unlike most defendants I see in court every day, have choices."