The Wall Street Journal-20080129-SafeNet Ex-Executive Gets 6 Months for Backdating

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SafeNet Ex-Executive Gets 6 Months for Backdating

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Associated Press

The former chief financial officer of network-security products maker SafeNet Inc. was sentenced to six months in prison and fined $1 million on securities-fraud charges in the backdating of millions of dollars of employee stock-option grants.

U.S. District Judge Jed S. Rakoff yesterday told Carole Argo that she was deserving of leniency because of her charitable deeds and because her crimes weren't nearly as serious as those committed in some of the other financial frauds of the past decade. He also said a stern message was being sent with the fine.

Judge Rakoff said federal sentencing guidelines in the case called for a prison term of between nine and 10 years. The federal probation office had recommended a sentence of nearly five years.

Before she was sentenced, Ms. Argo, 46 years old, of Baltimore, said: "My apologies to everyone who was harmed by this." The courtroom was packed with her family, friends and a dozen employees of SafeNet, including its president and chief lawyer.

Paul Engelmayer, her lawyer, said she already had given back $236,000 in profits. He said it was unlikely she could afford the $1 million fine.

In October, Ms. Argo pleaded guilty to securities fraud, admitting she backdated millions of dollars of employee stock-option grants at SafeNet. Federal prosecutors said she conspired with others to routinely backdate option grants so they appeared to have been issued when SafeNet's stock price was at a low point.

In October 2006, the company's top officers, including its president, chief operating officer and Ms. Argo, resigned.

Earlier this month, Gregory Reyes, the former chief executive of Brocade Communications Systems Inc., was sentenced to 21 months in prison and ordered to pay a $15 million fine for backdating stock options.