Though it acquitted him on one count of conspiracy, a federal jury on Friday found Reyes guilty on nine counts of securities fraud and making false statements–the same ones overturned last August because of prosecutorial misconduct.

Reyes, as you may recall, was charged in 2007 with “routinely backdating stock options grants to give employees favorably priced options without recording necessary compensation expenses. From 2000 through 2004, prosecutors alleged, he used the virtually unchecked authority given to him to grant ‘in the money’ options to employees by falsifying in the options documentation the date on which the grants were made and thereby granting the options with below-market strike prices.” In doing so, prosecutors argued, Reyes defrauded Brocade shareholders and violated generally accepted accounting rules.

Interestingly, Reyes’s legal team in the former exec’s most recent trial, opted not to call any witnesses in his defense–evidently an unwise idea give the evidence against him, which included testimony about Reyes’s “It’s not illegal if you don’t get caught” attitude toward options backdating.

Reyes will be sentenced on June 24. His attorneys say they plan to ask the judge for a new trial.

Citing misconduct by prosecutors, a three-judge panel of the United States Court of Appeals for the Ninth Circuit in San Francisco ordered a new trial for Reyes, who had been convicted of 10 charges of conspiracy, fraud, making false regulator filings and falsifying records for backdating hundreds of employee stock options.

A favorable turn of luck for Reyes, who had been sentenced to 21 months in prison and ordered to pay a $15 million fine for misdeeds that, according to that three-judge panel, had been grossly exaggerated and perhaps even fabricated.

“Deliberate false statements by those privileged to represent the United States harm the trial process and the integrity of our prosecutorial system,” Judge Mary Schroeder wrote in the 3-0 ruling. “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.”

The panel stopped short of throwing the case out entirely, noting that “there was no question that Reyes signed off on stock-option grants that were priced retrospectively and that the backdating allowed Brocade to understate its compensation expenses.” So the United States attorney could opt to retry the case, though that seems a bleak option at this point given the tenor of the ruling.

“This is the highest profile [backdating] case they had that went to trial, so I’d expect they will try it again, if for no other reason than for reputational purposes,” Wayne State University law professor Peter Henning told the Mercury News. “But talk about a case that’s stale.”

The company neither admitted nor denied wrongdoing, though CEO Sal Iannuzzi’s comment on the matter was fairly apologetic, as well it should be–after all, Monster had to restate its results for 1997 through 2005 to the tune of about $339.5 million (pre-tax). “This is an important step in closing an unfortunate chapter in the company’s history and putting the issue firmly behind us,” Iannuzzi said in a statement. “Our current executive team has spent the last two years refocusing Monster on its customers and shareholders, retooling the day-to-day management, and overhauling governance in an effort to adhere to the highest standards.”

Should the settlement be approved at an upcoming Oct. 31 hearing, it will put an end to an options debacle that’s been going on since 2006.

Should the settlement be approved at an upcoming Oct. 31 hearing, it will put an end to an options debacle that’s been going on since 2006.

The settlement marks the end of a legal debacle that began back in 2006, after an investigation by the Apple board uncovered some troubling options grants at the company. It also means that Jobs, who was likely to have been called to testify in Heinen’s SEC trial, won’t be. “This is it for backdating of stock options and Apple,” Peter Henning, a law professor at Wayne State University, told the Los Angeles Times. “Steve Jobs dodged a bullet.”

The settlement marks the end of a legal debacle that began back in 2006, after an investigation by the Apple board uncovered some troubling options grants at the company. It also means that Jobs, who was likely to have been called to testify in Heinen’s SEC trial, won’t be. “This is it for backdating of stock options and Apple,” Peter Henning, a law professor at Wayne State University, told the Los Angeles Times. “Steve Jobs dodged a bullet.”

Happy news for Apple, CEO Steve Jobs (shown above in mid-victory dance) and former Apple CFO Fred “It was you, Fredo” Anderson and former general counsel Nancy Heinen, who’ve all managed to dodge quite a legal bullet. Presumably it will be quite a bit more difficult for the civil suits filed against them to succeed with no criminal charges being filed.

Happy news for Apple, CEO Steve Jobs (shown above in mid-victory dance) and former Apple CFO Fred “It was you, Fredo” Anderson and former general counsel Nancy Heinen, who’ve all managed to dodge quite a legal bullet. Presumably it will be quite a bit more difficult for the civil suits filed against them to succeed with no criminal charges being filed.

On Wednesday, AAPL sold off on news that the company, CEO Steve Jobs, former CFO Fred Anderson, former general counsel Nancy Heinen and several Apple board members were hit with a purported class-action lawsuit in federal court in San Jose related to the company’s stock-options backdating scandal. Shareholder lawsuits always sound scary, but there’s nothing to this that holders don’t already know: the company admitted that some options were backdated, but both Apple and Jobs have avoided any federal prosecution. Anderson settled SEC charges related to the situation; litigation by the Commission against Heinen is pending.

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I am a media-relations nightmare. I never prep, and I generally say what I think–and sometimes I say things before I think. I don’t know how many times people in the company have heard me say something to a reporter and later told me, ‘Jesus Christ, that’s going to be in the paper!’”

–Henry Nicholas, July 2004

According to Forbes, former Broadcom Corp. chief and founder Henry Nicholas ranks 677th on the list of the world’s wealthiest individuals. But according to a federal indictment unsealed today (full document below), he’d rank quite a bit higher on a list of the world’s most debauched. Scattered among charges related to improperly backdating stock options while he led the computer and cellphone chip-maker are some heavy drug violations. According to the indictment, it seems that while Nicholas was fraudulently backdating stock options that resulted in more than $2 billion of restated expenses, he was also conspiring to distribute controlled substances.

Those he didn’t use himself, that is. From the indictment:

In or around 2001, Nicholas distributed and used controlled substances during a flight on a private plane between Orange County and Las Vegas, causing marijuana smoke and fumes to enter the cockpit and requiring the pilot flying the plane to put on an oxygen mask.”

Nicholas also apparently had a habit of spiking the drinks of associates and customers with drugs. Generally ecstasy. Hell of a way to close a sales meeting, eh?

As noted here before, it’s hard to believe that an entrepreneur and philanthropist like Nicholas would conduct himself like a roadie on Zeppelin’s debauched 1973 tour. But then no one probably thought he was serious about building that subterranean sex lair, either. Anyway, here’s the drug indictment. Click on the box in the far right-hand corner to enlarge:

In a regulatory filing yesterday, Google (GOOG) said that Mather was notified last Wednesday that the SEC planned to recommend civil proceedings against her. That recommendation, Google was quick to stress, arises out of her prior employment at Pixar. If Mather, who has served as a member of the Google board of directors since November 2005, approved the improper dating of stock-option grants, she didn’t do it under the search sovereign’s aegis. That said, Google doesn’t seem to think she was involved at all. Said Google CEO Eric Schmidt, “We have the utmost confidence in Ann’s integrity, as well as her abilities as a director, and we continue to support Ann’s re-election to our board of directors.”

That’s a persuasive vote of confidence. Still, the SEC presumably has some reason for recommending civil action against Mather. And Disney (DIS), though it cleared former Pixar CEO Steve Jobs and anyone else “currently associated with Disney” of wrongdoing in connection with the options backdating that occurred at the company, never did offer an explanation of how the backdating came to pass. Perhaps one will be forthcoming from the SEC.

And that puts Jobs in an uncomfortable position. Because while Apple has cleared him of any wrongdoing, former Apple CFO Fred “It was you, Fredo” Anderson did try to implicate him in the scandal (Post continues after video … ).

Though Apple dismissed Anderson’s accusations as the ravings of a madman, they’re still not the sort of thing you want hanging over you when you’re testifying before an SEC panel. Because though the agency has said it will take no action against Apple, it hasn’t ruled out continued scrutiny of Jobs.

Reyes was charged last year with “routinely backdating stock options grants to give employees favorably priced options without recording necessary compensation expenses. From 2000 through 2004, prosecutors claimed, Reyes “used the virtually unchecked authority given to him to grant ‘in the money’ options to employees by falsifying in the options documentation the date on which the grants were made and thereby granting the options with below-market strike prices.” In doing so, they argued, he defrauded Brocade shareholders and violated generally acceptable accounting rules.

And it seems the jury called to hear the case agreed. Apparently, it too found the low-priced grants Reye’s made in committee-of-one “meetings with himself” a little bit more than suspicious.

Reyes could face a decade or more in prison for his misdeeds, which should put the fear of God into the dozens of other corporate executives who are under investigation by the Justice Department and the Securities and Exchange Commission in connection with backdated options. “This is a pretty big win for the government,” former federal prosecutor Peter Henning told Bloomberg. “It may well encourage more cases or push some investigations forward.”

Reyes was charged last year with “routinely backdating stock options grants to give employees favorably priced options without recording necessary compensation expenses. From 2000 through 2004, prosecutors claimed, Reyes “used the virtually unchecked authority given to him to grant ‘in the money’ options to employees by falsifying in the options documentation the date on which the grants were made and thereby granting the options with below-market strike prices.” In doing so, they argued, he defrauded Brocade shareholders and violated generally acceptable accounting rules.

And it seems the jury called to hear the case agreed. Apparently, it too found the low-priced grants Reye’s made in committee-of-one “meetings with himself” a little bit more than suspicious.

Reyes could face a decade or more in prison for his misdeeds, which should put the fear of God into the dozens of other corporate executives who are under investigation by the Justice Department and the Securities and Exchange Commission in connection with backdated options. “This is a pretty big win for the government,” former federal prosecutor Peter Henning told Bloomberg. “It may well encourage more cases or push some investigations forward.”

Steve and Fred were great buddies from 1997
to 2004.”

That’s what Charles Wolf, president of Wolf Insights, had to say yesterday about former Apple CFO Fred Anderson and the sucker punch he threw at CEO Steve Jobs yesterday (see “I Know It Was You, Fredo. You Broke My Heart. You Broke My Heart!” and “Digital Daily Video 2007.04.25“). Which pretty much says it all, because “great buddies” is about the last phrase you’d use to describe the two men in 2007. Mortal enemies is more like it–certainly now that Apple has responded in kind to Anderson’s statement throwing him back under the bus he’d commandeered and attempted to run down Jobs in.

On Wednesday afternoon, Apple board members Bill Campbell, Millard Drexler, Al Gore Jr., Arthur D. Levinson, Eric Schmidt and Jerry York rose to Jobs’s defense, saying they stood by an internal investigation that had cleared him of any wrongdoing with regard to options backdating. “We are not going to enter into a public debate with Fred Anderson or his lawyer,” the board said in a terse statement. “Steve Jobs cooperated fully with Apple’s independent investigation and with the government’s investigation of stock option grants at Apple. The SEC investigated the matter thoroughly and its complaint speaks for itself, in terms of what it says, what it does not say, who it charges, and who it does not charge. We have complete confidence in the conclusions of Apple’s independent investigation, and in Steve’s integrity and his ability to lead Apple.”

Steve and Fred were great buddies from 1997
to 2004.”

That’s what Charles Wolf, president of Wolf Insights, had to say yesterday about former Apple CFO Fred Anderson and the sucker punch he threw at CEO Steve Jobs yesterday (see “I Know It Was You, Fredo. You Broke My Heart. You Broke My Heart!” and “Digital Daily Video 2007.04.25“). Which pretty much says it all, because “great buddies” is about the last phrase you’d use to describe the two men in 2007. Mortal enemies is more like it–certainly now that Apple has responded in kind to Anderson’s statement throwing him back under the bus he’d commandeered and attempted to run down Jobs in.

On Wednesday afternoon, Apple board members Bill Campbell, Millard Drexler, Al Gore Jr., Arthur D. Levinson, Eric Schmidt and Jerry York rose to Jobs’s defense, saying they stood by an internal investigation that had cleared him of any wrongdoing with regard to options backdating. “We are not going to enter into a public debate with Fred Anderson or his lawyer,” the board said in a terse statement. “Steve Jobs cooperated fully with Apple’s independent investigation and with the government’s investigation of stock option grants at Apple. The SEC investigated the matter thoroughly and its complaint speaks for itself, in terms of what it says, what it does not say, who it charges, and who it does not charge. We have complete confidence in the conclusions of Apple’s independent investigation, and in Steve’s integrity and his ability to lead Apple.”

The truth of the matter is everything is fine. We’ve shared it all with the SEC. It’s raised questions, but some of the journalism has been so off the mark. But I know the truth. It’s painful to read some of this stuff, but I know it’s kind of ridiculous and will pass.”

– Apple CEO Steve Jobs, the New York Times, Jan. 12, 2007

Apparently, Fred Anderson is the “Fredo” of the Apple options backdating family. This morning Anderson, who resigned as Apple’s CFO in October of 2006, issued he advised Apple CEO Steve Jobs of the accounting implications that might arise from the backdating of stock-options grants in January 2001. This, of course, runs contrary to the party line at Apple, which has held, vehemently, that Jobs wasn’t aware of the accounting implications of backdating. From Anderson’s statement:

Fred was told by Steve Jobs in late January 2001 that Mr. Jobs had the agreement of the Board of Directors for the Executive Team grant on Jan. 2, 2001. At the time Mr. Jobs provided Fred this assurance, Fred cautioned Mr. Jobs that the Executive Team grant would have to be priced based on the date of the actual Board agreement or there could be an accounting charge. He further advised Mr. Jobs that the Board would have to confirm its prior approval in a legally satisfactory method. He was told by Mr. Jobs that the Board had given its prior approval and the Board would verify it. Fred relied on these statements by Mr. Jobs and from them concluded the grant was being properly handled.”

You can almost hear the shrieks of outrage from 1 Infinite Loop, can’t you?

Anderson’s statement hit the wires just after the Securities and Exchange Commission filed a lawsuit against Nancy Heinen, former general counsel at Apple, alleging her actions led to “fraudulent” stock-option backdating at the company (see “We Used an AirPort Extreme to Extend Steve’s “Reality Distortion Field” to SEC Headquarters“). Meanwhile, Anderson himself has agreed to a settlement with the SEC that calls for him to pay $3.5 million in fines and penalties, but does not require him to admit liability.