Technology

SAN JOSE (AP) ― The former chief executive of Brocade Communications Systems Inc. vouched for his co-defendant in a closely watched stock options backdating case, asserting in documents unsealed Wednesday that she didn't know she was executing improper transactions.

Gregory Reyes, Brocade's chief executive from 1998 to 2005, said he alone was responsible for picking the date of stock options grants at the San Jose-based company. He vowed to testify at former human resources chief Stephanie Jensen's trial that he assured her of the accuracy of the options information he gave her.

"Ms. Jensen did not have the authority to choose the date or stock price of options. Only I had that authority, and only I knew when I made my decisions," Reyes said. "I told Ms. Jensen that the option grant dates were the dates that I made the granting decisions."

Separate juries later convicted both Reyes and Jensen—the first two executives to go on trial over backdating—of hiding the costs associated with retroactively priced stock option awards to make Brocade appear more profitable than it was.

At least a dozen executives at different companies across the country have been charged over their companies' stock options practices.

About 200 companies have been targeted by Justice Department and Securities and Exchange Commission investigations, and many have had to restate their finances, erasing billions of dollars in previously reported profits and leading to the ouster of dozens of corporate officers.

Reyes made his declaration, which U.S. District Court Judge Charles Breyer unsealed, in March as part of his successful bid to separate his trial from Jensen's.

Reyes did not testify during either trial so the document offers the first snippet of Reyes's voice in the closely watched Brocade backdating cases.

The statements could come back to haunt him, however. Breyer could decide Reyes obstructed justice by providing false information to a judge, which could add more prison time to any sentence Reyes ultimately receives.

Reyes' defense lawyers offered the declaration as part of their argument that if the cases were tried together, Reyes' case could be hurt if the U.S. Attorney's Office suddenly dropped the case against Jensen or if she decided to plead guilty.

Reyes also said in the declaration that he never instructed Jensen to alter the dates on offer letters, as the government had alleged, and that Jensen never said anything to him indicating that she knew Brocade's financial reports contained inaccurate information.

"If our trials were severed I would testify that at all times during Ms. Jensen's tenure at Brocade I believed that Ms. Jensen conducted herself with the utmost integrity," Reyes said. "I never thought she did anything illegal, improper, immoral or unethical."

In unsealing the documents, Breyer said Reyes's statements, which he refused to unseal during Reyes's and Jensen's trials, are relevant in determining a sentence.

The first executive to go on trial over improperly backdated stock option awards, was convicted in August of 10 counts of securities fraud after a six-week trial. Sentencing guidelines stipulate a stint of 15 months to 21 months in prison, Breyer has written.

Reyes's sentencing has been postponed while the court hears arguments by his defense lawyers for a new trial.

They claim a key government witness—Brocade's former stock administrator, Elizabeth Moore—has now recanted parts of her testimony and claims that prosecutors bullied her and misused her statements in their closing arguments.

A hearing is set Jan. 9 on Reyes's motion for a new trial.

(© 2010 The Associated Press. All Rights Reserved. This material may not be published, broadcast, rewritten, or redistributed.)