Real Time Media

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.

Still no verdict folks… Are you as anxious as I am?

Today a Stipulation (an agreement) regarding Exhibit 7706 was ordered.

Exhibit 7706 pertained to information about KPMG.

In order to protect the confidentiality of certain KPMG information, Greg Reyes, the Prosecution & KPMG ( non-party) all agree to remove from the record, all pages from Exhibit 7706 except pages 1, 2, 13, 14, & 15.

The Deliberations officially commenced today.

The Jury will be in insolation until they come to a verdict.

I really hope the jury understands how significant this process is, and they are able to see through all of the Prosecution’s fallacies.

The jury was officially “sequestered” by the United States Marshal during their deliberations today.

Sequestering involves isolation of jurors outside of court proceedings, disallowing any external contact.

This process is usually taken only for high profile cases, where the contact with the outside might prejudice the jury’s verdict.

In the Prosecution’s closing argument, they stated how Greg Reyes was issued 13 million stock option shares. However what they failed to mention, and Atty Neal did, was that Greg Reyes exercised only 0.3% of them!

Out of 13 million, he only exercised 40,00 total!

Prosecution, stop leaving out the important facts!

Atty Neal reminded the jury that although Greg Reyes is a defendant in this case, they should not allow the case to forget that Brocade was, and still is a very successful company.

This success was due to Greg Reyes. In his 6 years at Brocade, he increased the revenue from 24 million to 596 million. He built a great company, and Brocade’s growth and success was primarily because of Reyes’ leadership.

Neal talked about the “Dirty Dozen” today and I loved it.  It was a list of 12 things (witnesses or documents) that have been distorted by the government throughout the trial, and I couldn’t agree more.  Of the “Dirty Dozen” topics such as the Beyer testimony, Reyes granting options to himself, Craig Martin’s story, FAS 123 footnotes, Cudgma’s options, Cuevas and Lee’s testimonies, to name a few.

Def. Atty. Neal stated that Craig Martin’s (prosecution’s witness) investigation was bias, and I agree with him.

1. Failed to collect certain critical documents

2. Failed to interview some crucial people at Brocade

3. Paid off and relied on a discharged employee

4.  Allowed Sonsini to determine what documents were given to the government

Atty Neal points out how the Government also failed to discuss the role of the Audit Committee and how they were ultimately responsible for what is disclosed in financial statements. The Audit Committee also knew of the backdating; They in fact authorized backdated stocks to themselves!

Seems like there are so many players in the game, but Greg Reyes is the one being called out..

Prosecution needed to show that the information in the APB 25 was material to investors, and therefore investors were misled by Brocade’s 10 K forms.

However, the Prosecution failed to present any witness to prove that. The only 2 investors that did testify stated that they did not use the 10 k when making investing decisions.

Atty Neal critiques the Prosecution, and how they did not present any witnesses who could explain details of APB 25.

The Govt is so quick to point the finger at Greg Reyes for not applying APB 25 standard, when they cannot even find one witness who can testify to understanding the standard!

Reeves states that in deed APB 25 was discredited.  However, he states that tech companies like Brocade did everything in their power to keep APB 25 because FAS 123 would hurt their earnings, performance, and stock price.  Well then why did Reyes and Brocade use FAS 123 throughout the 2000-2004 periods?

Of the points Reeves made in his rebuttal he stated that Reyes lied in the Craig Martin interview.  He referred to emails between Reyes and Bidzos where Reyes stated that backdating is in fact illegal.  Well what he did not reveal to the jury, the most critical part, the subject of those emails, Section 16 Officers.  This is when it is actually illegal to backdate because the grants need to be reported to the SEC within 48 hours.  Well Reyes, new this, reported appropriately, and broke no laws.

Pros. Reeves tells the jury that “Reasonable doubt is based on reason, not speculation.”  However, in my opinion, that is exactly what he has put into the jurors minds with all of the witnesses they have called, with all the misleading testimonies.  Def. Atty. Neal states that speculation is not credible evidence, a speculation testimony has no place in a court room.  Hopefully the jury will see this and be aware of what is going on!

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

Atty Neal begins his strong closing argument by explaining to the jury how the Prosecution’s evidence was taken out of context.

Specifically in reference to Craig Martin’s testimony:
On cross examination, it was clear that Martin was testifying about things that were completely inconsistent, basically putting words in Reyes’ mouth.

He also responded about 50 times (during cross-examination), that he “didn’t remember” things discussed during his conversation with Reyes.

Prosecution makes a point that Greg Reyes is innocent if “he possessed a good-faith belief that the alleged false or misleading statements were accurate.”  Well then he is innocent because there is no evidence that states that Reyes knowing or willfully cheated or deceived his finance department.  They knew everything, they were all over it.

According to the prosecution Greg Reyes’ Crime is:

1. Scheme to Defraud

2. Conspiracy

3. False SEC Filing

4. False Statements to an Accountant

5. False Books and Records

However, I feel they are missing one key piece… The LINK that ties Reyes to any of this.