A somber Judge Charles Breyer sentenced former Brocade HR chief Stephanie Jensen to four months in prison Wednesday -- even though the probation office recommended a halfway house for her crimes relating to stock option backdating.
After Jensen tearfully expressed remorse and pleaded for mercy, Breyer appeared moved. He spoke unscripted about Jensen's "modest life," noting how she "never used money in a flamboyant, or perhaps inappropriate way.""Your values are good values, which makes it even sadder that you are here today," the judge said.
Yet Breyer stressed the need to send a deterrent message to corporate executives about the importance of keeping honest books and records. Failure to do so "withdraws the underpinning" of sound financial markets, he said.
When it comes to perpetrating a scheme to defraud, a CEO must be enabled by someone else, Breyer said.
"That person has to say no," the judge said.
A jury convicted Jensen in November of two counts of falsifying books and records, after prosecutors dismissed securities fraud charges against her just before trial. Breyer sentenced former Brocade CEO Gregory Reyes to 21 months in prison in January for his role in stock option backdating at the company.
In the Reyes hearing, Breyer indicated he would have sentenced the former executive to 15 months in jail, but for a false declaration he submitted to the court to help Jensen sever her trial from his. Breyer dinged Jensen for statements her lawyer made in the same gambit, though the penalty was less severe: The judge said he would not have imposed any supervised release after prison had the obstruction of justice not occurred.
Breyer settled on one year of supervised release. He also imposed the maximum fine of $1.25 million, and tacked on three months in a halfway house after the prison time. The government had asked for six to eight months in prison, while Jensen's attorney, Keker & Van Nest's Jan Little, requested home confinement. Breyer stayed the sentence pending appeal.
"When [executives] falsify a company's books and records and auditors, regulators and shareholders are misled as a result," assistant U.S. Attorney Timothy Crudo said, "there are real consequences to real victims, as there were here."
Little began her presentation Wednesday by disagreeing with Breyer's conclusion that Jensen had obstructed justice with her untrue statements to the court.
"Whatever happened was not Ms. Jensen's fault. This was my work, and it was my fault," Little said. "She relied on me."
Breyer responded that Little was "known to the court for many years," and that very few lawyers had her integrity.
"I am sorry to have to drive a wedge between you and your client in this regard," the judge said. "I do not hold you responsible. I do hold your client responsible."
