AP News, December 19th, 2006
A federal jury convicted four former Enterasys executives on securities fraud and conspiracy charges Tuesday, but was unable to reach a verdict on five charges against the computer networking company's former chief operating officer.
The verdict came after more than a week of jury deliberations in the case in which the onetime executives were accused of scheming to inflate company revenues in the quarter ending Sept. 1, 2001.
The charges related to sales contracts, investments and revenue the computer networking company reported during and immediately after the company's spinoff from Cabletron Systems Inc.
The four former executives were convicted on 27 of 39 conspiracy, securities and wire fraud charges against them.
They included former chief financial officer Robert Gagalis, 49, of Rye; former vice president Bruce Kay, 53, of Yarmouth, Maine; former accountant Robert Barber, 53, of Durham; and David Boey, 51, of Atlanta, who worked in the company's Singapore office.
Former chief operating officer Jerry Shanahan, the only defendant who was not a certified public accountant, was acquitted on one count of securities fraud. The jury returned no verdict on a wire fraud charge, three other securities fraud charges and a conspiracy charge.
Shanahan, who is from Ireland, will remain free on bail while the U.S. Attorney's office decides whether to retry him on those charges or dismiss them, said spokeswoman Linda Tomlinson.
The securities fraud charges are each punishable by up to 10 years in prison, while conspiracy can draw up to five years in prison and a $250,000 fine. The four executives will remain free until they are sentenced on March 21 and March 22.
Enterasys, which was publicly traded and based in Rochester, N.H., at the time, makes routers and switches for corporate networks. The company has since moved to Andover, Mass., and went private in March.
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On the Net:
http://www.enterasys.com
