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Reyes Gets 21 Months for Backdating

Ex-Brocade CEO Greg Reyes, the first CEO to be tried and convicted on backdating charges, was sentenced today to 21 months in prison and $15 million fine.

It could have been worse. It could have been 20 years. As it was, the prosecution asked for 30-33 months in jail, $89 million in restitution to Brocade and a fine of $41.2 million.

Reyes’ lawyer Richard Marmaro saved him some jail time. According to the Wall Street Journal, the judge indicated he would have given him a stiffer sentence but for the eloquence of Marmaro’s plea for leniency.

Marmaro asked for 12 months – a combination of nine months in a halfway house and an additional stint under house arrest – but the judge was more severe because he agreed with the prosecution that Reyes attempted to mislead the court in early court filings, which Marmaro blamed on poor lawyering.

The judge was also moved by Reyes’ past charitable contributions.

The judge declined to award restitution figuring Brocade is probably going to sue Reyes and thought the fine the prosecution asked for was too higher.

The restitution was meant to recover Brocade’s outlay for Reyes’ legal bills, its internal investigation and the $7 million it paid last year to settle a suit by the SEC.

Twenty-one months is the high end of what observers thought he would get.

Reyes, who’s worth $250 million, was found guilty of 10 counts of fraud, falsified accounting, conspiracy and filing false financial statements.

Last week he was denied a new trial after one witness recanted her testimony and admitted to lying, feeling bullied by the prosecution. The judge said it wouldn’t have made any difference if she had admitted that the finance department knew about the backdating.

He will be free pending appeal.

Brocade’s former HR Stephanie Jensen, Reyes’ co-conspirator, is scheduled for sentencing in April.



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