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Indicted McAfee GC Wants Discovery From Howrey
Former McAfee GC says the law firm that investigated McAfee's stock option backdating might have useful information for him
The Recorder
December 11, 2007
Defense lawyers for former McAfee general counsel Kent Roberts might put Howrey on the hot seat.
Cooley Godward Kronish partner William Freeman -- who represents Roberts against SEC charges stemming from stock option backdating -- said he may be forced to file a motion to compel against McAfee and Howrey. His comments came in a status conference Monday in San Francisco before U.S. District Judge Marilyn Hall Patel.
The company used Howrey to do its internal investigation. Both McAfee and Howrey possess relevant information that they did not turn over to the government, Freeman said, which could shed light on how backdating occurred at the company.
"They focused on my client" in what they shared with the government, Freeman said. Roberts is also defending himself against a criminal indictment before Patel.
Freeman did not specify why Howrey and the company may be refusing to turn over documents.
Howrey partner Robert Gooding Jr. led Howrey's team on the internal investigation. "We will respond to any potential motion to compel in court, not the press," he said Monday.
A McAfee spokesman said he didn't know the details of any comments made in court Monday, but said the company has been cooperating with both the Securities and Exchange Commission and Department of Justice investigations.
McAfee's CEO and president both left the company last year in the wake of Howrey's investigation. Roberts was indicted in February of this year. The company has said it expects to restate earnings by $100 million to $150 million due to misdated stock options.
Third-party discovery disputes are nothing new in backdating cases. In the government's criminal prosecution of former Brocade chief executive Gregory Reyes, defense counsel sought the original "interview summaries, notes and memoranda" relating to the internal investigation at the company.
The two law firms that conducted the internal investigations at Brocade -- Morrison & Foerster and Wilson Sonsini Goodrich & Rosati -- asserted attorney-client privilege. But Judge Charles Breyer ruled that privilege did not attach during the criminal proceeding, because the firms effectively waived it when they offered to share information with the government.
Federal prosecutors said they turned over most everything they had to the Cooley team. Discovery in the SEC case is proceeding at the same time that Roberts' criminal lawyers are preparing for an April 15 trial. So if Roberts' defense team can get documents via the civil proceeding, they may be able to use them in the criminal case.
Interview notes collected during an internal investigation could be helpful to the defense when cross-examining government witnesses, if those witnesses make statements that conflict with what they told company investigators.
But the benefits of such statements can cut both ways. Many observers believe prosecutors severely damaged Reyes' credibility when they revealed a statement Reyes gave during the Brocade investigation. Reyes said he did not backdate, a statement that conflicted with later defense arguments.
Patel said that if the government was the source of the discovery dispute, she would "cajole" them toward a solution. But since third parties who were not before her on Monday are involved, Patel said, she would have to "see what happens," i.e., whether the parties can work it out themselves, or not.
