Legal News

In Big Backdating Trial, Defense Rests Without Putting on Witnesses

By Dan Slater

The McAfee backdating trial, which began with a big to-do over a certain discovery gaffe, appears to have come full circle.

The stock-option backdating case against former McAfee GC Kent Roberts went to the jury without the defense calling any witness. According to this report by the Recorder’s Dan Levine, Roberts’s lawyer, Cooley Godward Kronish partner Stephen Neal, merely informed the jury about McAfee’s late production of relevant e-mails at the beginning of trial. In his closing argument, Neal (pictured) referenced the gaffe again, saying at one point that the jury was Roberts’ last guardian against “a system that hasn’t worked the way it was supposed to work.”

Here’s what he might have had in mind: At the beginning of trial, Robert Gooding Jr., the Howrey partner who headed the firm’s internal investigation into backdating at McAfee, blamed contract lawyers for the firm’s failure to turn over relevant e-mails. Gooding said he was sorry. “In a document production this size, these things do happen,” he said. But the Cooley Godward defense lawyers, who filed a motion to dismiss shortly after the hearing, were incredulous. “It is fanciful for [Howrey] to get up and say it is inadvertent,” Cooley Godward’s Neal said in court. “This is one of the most irresponsible searches in history.”

Whether the jury will consider that important is anyone’s guess.

In her closing, AUSA Laurel Beeler, according to the Recorder, hammered home the point that Roberts, as GC of the company, knew the rules. And regardless of what former controller Terry Davis might have told him, Beeler said Roberts knowingly broke those rules when he changed his grant date without board approval. “Saying someone said it was OK doesn’t make it true,” the prosecutor said. “It makes no sense. His story makes no sense.”

Most of Neal’s argument focused on evidence that Davis had the authority to change Roberts’ grant. If that’s the case, no crime was committed, he said. Neal also used the discovery gaffe, reports the Recorder, to raise questions about another document — a list of stock option grants that might show that the board actually signed off on the change after all. But since the company never produced the list, Neal said, the government can’t prove Roberts’ grant was unauthorized. “It’s not [the government’s] fault they don’t have it,” Neal said of the list, “but they don’t have it.”

Full post as published by Law Blog - WSJ.com on October 01, 2008 (boomark / email).