Latest Legal News from the Criminal Courts of Los Angeles, California and the U.S.

March 21, 2008

Vice President Stephanie Jensen Sentenced to 4 Months in Prison and a $1.25 Million Fine

SAN FRANCISCO: The United States Attorney's Office announced today that Stephanie Jensen, the former human resources vice president at Brocade Communications Systems, Inc. of San Jose, California, was sentenced to four (4) months in prison and ordered to pay a $1,250,000 fine stemming from her fraudulent backdating of stock options at Brocade.

After a two-week trial, Ms. Jensen was convicted by a jury on December 5, 2007 of one count of conspiracy and one count of falsifying books and records relating to the scheme. During the trial, evidence showed that Ms. Jensen, 50, of Los Altos, California, schemed to price option grants to Brocade employees by using historical stock performance data to pick low prices while backdating the grant minutes to hide when the options were actually granted. By this scheme, Ms. Jensen enabled Brocade improperly to avoid recognizing compensation expenses that would have reduced the company's reported net income. The evidence also showed that Ms. Jensen obstructed justice by filing a false declaration from her co-defendant, former Brocade CEO Gregory L. Reyes, in order to sever her trial from Mr. Reyes’s trial. In August 2007, Gregory Reyes was convicted after trial for criminal charges stemming from the same wrongful conduct.

The sentence was handed down by United States District Court Judge Charles R. Breyer following the defendant's conviction on a total of 2 counts in violation of 18 U.S.C. § 371 (Conspiracy) and 15 U.S.C. §§ 78m(b)(2)(A), 78m(b)(5), and 17 C.F.R. § 240.13b2-1 (Falsifying Books, Records, and Accounts). Judge Breyer also sentenced the defendant to three (3) months in a residential re-entry facility, one (1) year of supervised release, and a $200 special assessment. Ms. Jensen will remain on bail pending appeal.

Assistant United States Attorney Timothy P. Crudo, Chief of the Securities Fraud Unit, who tried the case together with Assistant United States Attorney Adam A. Reeves, commented: "This sentence recognizes the seriousness of the defendant's crime. As Judge Breyer has stated, the integrity of the capital markets in this country is fundamentally grounded on the honesty of executives of public companies, and when they falsify a company's books and records and auditors, regulators, and shareholders are misled as a result, there are real consequences to real victims, as there were here. The defendant’s prison sentence and fine should serve to deter similar corporate fraud in the future."

The prosecution is the result of an investigation by the Federal Bureau of Investigation and the United States Securities and Exchange Commission.

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CALIFORNIA CRIMINAL DEFENSE LAWYER

JOSEPH SHEMARIA

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Latest Legal News from the Criminal Courts of Los Angeles, California and the U.S.