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The courtroom was once again packed with supporters for Greg Reyes.

The court had to wait a few extra minutes until Judge Breyer entered.

After ruling on a few motions and the attorneys from each side sharing remarks Mr. Reyes was given a chance to speak.

He was unable to read his final remarks after being overcome with emotion. The remarks were read by his Atty Stephen Neal.

Judge Breyer then sentenced Gregory Reyes ex-CEO of Brocade to 18 months in a Federal facility and $15M in fines.

Based on the remarks from Breyer it looked as if Mr. Reyes was going to receive a longer sentence and larger fine.

Neither occurred.

This chapter is closed…it will be interesting to see what happens next.

It always amazes me how fast the news cycles move. The build up, accusations and drama that surround the trial are followed by the spike in buzz once the verdict is announced then silence. Not for the defendant and his family but for everyone else involved. I wonder what happens next? An appeal? A settlement? Another Trial? Was justice really served? What was actually achieved? A man was convicted for an accounting standard that no longer exists for expenses that were non-cash and appears to be the only one in America who is going to go down for this type of alleged crime.  If the system really worked a group of CEO peers with finance experience would have been convened and would have heard the case then told us if this really mattered. But, until the system is fixed the verdict stands. I’ll keep everyone posted on the appeal as it progresses.

I have been sitting on these comments for a nearly a week. Having sat through one of the highest profile securities cases in our Legal Systems history it is clear that the process is broken. The complexity of the topic exceeded the ability of the jurors to accurately deliberate. What lies in the balance is the ability of our system to properly administer justice. As I witnessed first hand that is not possible if the panel does not have the technical experience. The myth is if the facts are presented jurors can understand them and weigh them against the corresponding law. Really? Are you kidding me? I had a hard time following the case and forget applying the law…that added a dimension that put this into orbit complexity wise.

The founding fathers had it mostly right…having your peers settle disputes in open court would more often than not result in an unbiased resolution. But, they could never have fore-seen the complexities of today’s cases and need for experts to adjudicate (my word of the week) such complex issues as FAS123 vs APB25 etc.

The balance of a man’s life was held by people who on average do not even balance their checkbook on a monthly basis. How in Lord’s name could they be capable enough to render a decision in this case. They could render an opinion but not an informed decision. Then you add in the hubris of the Prosecution to win not administer justice and the dilemma begins. How can one receive a fair trial? You can’t. My advice stay out of court, away from the long arm of the Govt and move to Peru (JK). So what do we do now? I think its time for Legal reform. Change the process, incent the players to help find the truth not convict the accused. I know I’m dreaming their is to much money, ego and power in the current system for it to ever to be abandoned. Thought I would try.

How is it possible to be guilty of the follow on charges but not the key to the case…CONSPIRACY? Wow…if Reyes was judged by his peers this would have been done over in an afternoon. More later….

Atty Neal reminded the jury that they (The Defense) don’t have to prove ANYTHING and that the complete burden is on the Prosecution.

And the Prosecution has failed to provide the necessary evidence to find Greg Reyes guilty.

Atty Neal introduced Prosecution’s Critical Failures of Proof which he will explain in detail during the day:

Things the Prosecution FAILED TO SHOW

1. That Finance Dept was misled
2. That Greg Reyes made accounting decisions.
3. That Greg Reyes understood any particular definition of “grant date”
4. That APB25 information was important to investors
5. That FAS 123 disclosures weren’t more complete and more useful to investors
6. That Greg Reyes intended to deceive/ cheat anyone

BIG NEW FLASH!!!!

CLOSING ARGUMENTS MONDAY March 22, 2010.

Seems like the Jury will begin deliberations on Tuesday.

Wow…lets hope they have seen what we have from the behind the bar.

If they are fair minded folks this should be an acquittal.

There were five motions on the table today for the Judge to decide the Defense did not get the big one a MISTRIAL even though another Govt witness fabricated some of their testimony (BREYER).

Lets see how closing arguments go Monday.

As we are on break and I review the testimony to date a few things stick out:
#1. In order to get a conviction in the first trial the Govt had to LIE. They made statements in closing that they KNEW were fals in order to sway the jury.

#2. The Appeals court over turned the decision with harsh criticism of the Prosecutors.

#3. We are trying a case regarding regarding APB25 that no longer exists because the Accounting Board thought it was to confusing and didn’t do as good a job accounting for unrealized stock options as FAS 123.

#4. The Govt usually tries these types of cases to make an example out of someone when the law is actually in force…in this case the law has been off the books for almost 5 years.

In conclusion…it seems EGO is the only reason to keep spending millions of taxpayers dollars to try a case on law that is half a decade stale…..

Think their is a problem with the judicial system?

Oh yeah, in order to try and win again the Govt put a witness on the stand (Beyer) that lied again…wow…amazing how after 8 years he remembered new facts….good job!

As we wait for Judge Breyer to return from his conference it seems like this case has a lot of holes in it from the Govt’s end.

1. No witness has been able to testify that Greg Reyes told them to do anything.

2. If I recall the Govt’s opening statement they claimed they would be able to show Reyes hid the backdating from the Finance Dept and in turn signed Fraudulent 10k’s as far as we can tell everyone at the firm not only knew but also received backdated options (which is not a crime from our research).

3. Finance did take a COMP CHARGE for the options under FAS 123 but not APB25, which based on the testimony we heard is very complicated and open to interpretation.

4. APB25 was such a mess FASB eliminated it. So we are trying a man for a standard that does not even exist….seems like a waste.

5. As far as the conspiracy no one ha stood up and said Greg told them to do anything. Guilty by hearsay? Wow. Not god.

I’m sure the Jury has seen through all of the contrived testimony…

It’s all back on Monday -3/22/10.

After the jury was released the judge and law teams discussed the fact that the defense may not call any witnesses. Stephen Neal told the judge he would have a decision to the court on that fact by next Thursday. Prosecutor Anderson was somewhat outraged and demanded an answer by Monday at the latest.

The judge in all his fairness settled on noon Tuesday.

I can’t believe the Mercury News is “supposed” to be covering the biggest backdating case in HISTORY …yet when the Prosecution is caught again misleading the jury they are not on it?

Instead the Merc pulls the story from Bloomberg and doesn’t even mention the issue in their Daily or on-line publications….WOW!!!

Tech Ticker

Mercury News wire services
Posted: 03/10/2010 04:35:07 PM PST
Updated: 03/10/2010 07:51:28 PM PST

Brocade

Mistrial sought

Lawyers for former Brocade Communications Systems CEO Greg Reyes asked a federal judge to declare a mistrial in his stock-options backdating case, saying a prosecution witness gave false testimony. A former member of San Jose-based Brocade’s human-resources department testified March 1 at Reyes’ trial that the stock options granting process at his former employer, KLA-Tencor, didn’t involve “look-back pricing” that was used at Brocade, Reyes’ lawyers said in a filing Wednesday in federal court in San Francisco. San Jose-based KLA-Tencor restated financial results in 2006 and was sued by securities regulators in 2007 because it backdated stock option grants, the filing said. “There is no doubt that the government knows” that two KLA-Tencor grants discussed by the witness “were backdated,” Neal Stephens, an attorney for Reyes, said in the filing.

— Bloomberg News

Seems the Prosecution has a problem with more testimony.
Check this out:

Brocade

Mistrial sought….wow….

Lawyers for former Brocade Communications Systems CEO Greg Reyes asked a federal judge to declare a mistrial in his stock-options backdating case, saying a prosecution witness gave false testimony. A former member of San Jose-based Brocade’s human-resources department testified March 1 at Reyes’ trial that the stock options granting process at his former employer, KLA-Tencor, didn’t involve “look-back pricing” that was used at Brocade, Reyes’ lawyers said in a filing Wednesday in federal court in San Francisco. San Jose-based KLA-Tencor restated financial results in 2006 and was sued by securities regulators in 2007 because it backdated stock option grants, the filing said. “There is no doubt that the government knows” that two KLA-Tencor grants discussed by the witness “were backdated,” Neal Stephens, an attorney for Reyes, said in the filing.

— Bloomberg News

I was wondering why the lawsuit was sent in the form of a Draft Complaint and not just filed. Cudgima wanted to strong arm the company to forgive his $1.2M loan…and it seems he negotiated a $500K reduction in order to meet with the “investigating attorneys” all seems fine here…not.

I’m guessing the Govt doesn’t want the jury to understand that 100’s of companies were having an issue applying APB25 and that Brocade was no different. It would undermine their case.

I hope they get to read this in deliberation.
Such a bizarre process.

I’m not sure how serious this is but it seems like the Govt exhibit was “mismarked” and the wrong schedule of KEY STOCK GRANTS we’re not referenced in the direct examination. I would think for evidence the Govt was going to do Direct on they would have triple checked the reference numbers at the base of the emails…Hmmmmm

A quote shared by the prosecution… “Now all we have to do is focus and execute, we are all the masters of our destiny.”  -Greg Reyes to his employees … How inspiring, truly.

No Court this Friday – March 5th, 2010.

Beyer admitted that is was his own speculation that led him to think Jensen wanted to cover an “audit trail”, she never actually used those words.

Random Thought,
Seems like Witness Beyer wants to be on the stand… It look like its his 15 minutes of fame. Not sure what axe he has to grind…but I’m sure on cross something will be presented. Witness Beyer seems very happy with himself…not sure why he would be considering Reyes is on trial for his life.