X

Thank you for sharing!

Your article was successfully shared with the contacts you provided.
Christopher Steskal, the federal prosecutor who indicted the country’s first stock option backdating prosecution in June — and the leader of a criminal probe into Apple Inc.’s options grants — will leave the San Francisco U.S. Attorney’s Office next month to lead the white-collar practice at Fenwick & West. Steskal has been busy with options prosecutions in recent weeks — Apple CEO Steve Jobs was interviewed by prosecutors and SEC lawyers earlier this week, according to people familiar with the case. But the offer from Fenwick was too enticing, Steskal said. “I didn’t spread my resume around the Valley,” he said Friday, referring to Silicon Valley, saying that leaving a prosecutor’s post is never easy. “You’re always going to be leaving cases on the table,” he said. Steskal comes to Fenwick as perhaps the pre-eminent prosecutorial expert in options backdating, the white-collar bar’s biggest source of business these days. “He’s got the respect of his colleagues, the judges and the defense bar,” said Fenwick’s Chairman Gordon Davidson. Steskal leaves behind the impending trial of two executives from Brocade Communications — the first people to be indicted for backdating — as well as the Apple probe, which has so far zeroed in on the tech company’s legal department. Steskal said Friday that he was well into negotiations with Fenwick — which the firm initiated in November — before learning that Fenwick partner Dennis DeBroeck was married to Nancy Heinen, who had been Apple’s GC until last year. Sources have said investigators are interested in Heinen’s role in Apple’s options grants, and she has been represented by Cristina Arguedas, of Arguedas, Cassman & Headley and by Miles Ehrlich of Ramsey & Ehrlich since shortly after Apple’s internal probe into backdating was launched. That added a wrinkle to the standard conflict issues that arise when a prosecutor moves to the defense bar. “I learned that bit of information a little bit later,” he said, and immediately contacted the ethics officer of the San Francisco U.S. Attorney’s Office. “What we did was contact D.C. and got a written opinion from them, and I’m transitioning the case,” he said. “I’m not making any substantive decisions regarding that case.” Fenwick does intellectual property work for Apple, a client touted on the firm’s site. Steskal’s departure is a major blow to the U.S. Attorney’s Office. He’s been the lone prosecutor in the hard-fought Brocade case, and the main driver of at least a dozen other probes in addition to Apple. “It would be hard to understand how this couldn’t have an effect on that investigation, when the lead prosecutor, or co-prosecutor, is going to leave in the middle of the investigation,” said Thomas Carlucci, a partner at Foley & Lardner who represents former Apple in-house lawyer Wendy Howell, a potential target of the probe. With U.S. Attorney Kevin Ryan on his way out and his top deputy — and Apple co-prosecutor — Eumi Choi also shopping herself to white-collar defense firms, the move leaves dozens of options cases in limbo. Ryan spokesman Luke Macaulay said there are plenty of experienced prosecutors to absorb Steskal’s caseload, and that the office is close to hiring two new prosecutors to handle securities cases. Fenwick’s coup When Steskal settles into Fenwick’s San Francisco office, he’ll bring a high-profile white-collar name to a firm that has been missing one since its former top criminal defender, Brad Lewis, decamped last summer for a Fenwick client. The new recruit could mean big business: Fenwick’s robust corporate and securities litigation practices should feed white-collar work to Steskal. Speaking over coffee on Friday, Steskal said he hadn’t planned to leave the prosecutors’ office anytime soon, but was drawn by the opportunity to lead a practice that has a ready source of clients. “They’re one of the few firms left that have all the pieces in place except for someone to carry the white-collar load,” he said. “With such strong ties with board members in the Valley, they’re in a great position to do the internal investigations,” he added. Davidson agreed. “Our securities litigation practice has been inundated with special investigations,” he said. “Special investigations seem to be just a part of good corporate governance.” Steskal said Fenwick is also an attractive place because it has big Valley presence but hasn’t been associated with sketchy options practices. “They probably represent a third of the companies in the Valley, and relatively few of those companies have had the same stock options issues that other firms’ clients have had,” he said. “In part, I think that speaks a lot to their attention to corporate governance issues and conflict issues.” Still, potential conflicts are a major question when a prosecutor with pending investigations goes to the defense side. That was a concern of mine,” Steskal said, one that he, the U.S. Attorney’s Office and Fenwick worked carefully to address. “He can’t tell us what he’s working on and never will, but we gave him a list of the investigations we’re involved in,” Davidson said. “What I did was, any investigation where Fenwick represented parties or witnesses, I withdrew from,” Steskal added. Back on track While he’s made his name in government, Steskal said he’d been planning to be a defense lawyer since he graduated from Harvard Law School in 1992. But after working as an associate, first at Cravath, Swaine & Moore, then at Howard, Rice, Nemerovski, Canady, Falk & Rabkin, Steskal said, he decided he needed more trial experience and went to the U.S. Attorney’s Office. In 2001, then-San Francisco U.S. Attorney Robert Mueller was seeking to stock the office with bright young lawyers. “Bob Mueller hired me because he liked my resume,” Steskal said. “I was never going to be a career prosecutor,” he added. “I would be a career prosecutor if I was independently wealthy or had won the lottery, but I’m not and I haven’t.” Current and former prosecutors who’ve worked with Steskal say he’s known for being smart, aggressive and relentless. His courtroom reputation was sealed by the conviction last year of real estate developer John Hickey in a case he handled with Assistant U.S. Attorney Timothy Crudo. Steskal inherited the old — some would say stale — case years after it was indicted, and more than a decade after Hickey committed the acts that allegedly defrauded investors of $17 million. The new lead counsel had to dig through a pile of dusty files. “It was a huge task to marshal that case,” he said last week. “I mean, the evidence was way over 10 years old, and a lot of the witnesses hadn’t been interviewed in 10 years. A lot of them hadn’t been interviewed at all.” Steskal and Crudo secured a conviction on counts of securities and mail fraud. “He earned a great deal of respect in the office for resuscitating a very old prosecution and winnowing it down to a very successful case,” said Berkeley-based defense lawyer Miles Ehrlich, who, as a supervisor in the U.S. Attorney’s Office, had assigned the case to Steskal. But even while that trial was going on, Steskal had a probe of Brocade Communications simmering on the back burner. Paper trails Steskal said Friday that his interest in Brocade was first piqued by a New York Times column in early 2005 — long before anyone was paying attention to options backdating — that discussed the company’s financial restatement. “I was thinking like a securities class action lawyer, and there was a mention in the press release about document irregularities, and that’s a red flag,” he said. “You’ve got to think like Bill Lerach a little bit, and it’s actually a lot of fun.” He investigated it for more than a year before realizing that backdating would be bigger than his investigation of a single company. “Like most people, I started reading the Wall Street Journal piece” early last year on studies indicating that options backdating was widespread. Steskal’s investigation, conducted jointly with the SEC, continued another several months, and in June, former Brocade CEO Gregory Reyes and ex-HR manager Stephanie Jensen were charged. While the investigation was lengthy, Steskal said, “it didn’t take an unusually long time for a securities case.” But it did generate an unusual amount of publicity, rancor from the defense team and skepticism from U.S. District Judge Charles Breyer, who is presiding over both the criminal prosecution and the SEC’s civil suit against former executives. Breyer, though, had only good things to say Friday about the outgoing prosecutor. “I think he’s a very competent lawyer,” Breyer said. “He’s extremely professional. He’s industrious, and I have a great deal of respect for his integrity.” Richard Marmaro, a partner at Skadden, Arps, Slate, Meagher & Flom defending Reyes, wasn’t as quick with praise for the lead prosecutor on a case he’s publicly denounced. “I wish him the best in private practice,” he said. Justin Scheck can be reached at [email protected].

This content has been archived. It is available exclusively through our partner LexisNexis®.

To view this content, please continue to Lexis Advance®.

Not a Lexis Advance® Subscriber? Subscribe Now

Why am I seeing this?

LexisNexis® is now the exclusive third party online distributor of the broad collection of current and archived versions of ALM's legal news publications. LexisNexis® customers will be able to access and use ALM's content by subscribing to the LexisNexis® services via Lexis Advance®. This includes content from the National Law Journal®, The American Lawyer®, Law Technology News®, The New York Law Journal® and Corporate Counsel®, as well as ALM's other newspapers, directories, legal treatises, published and unpublished court opinions, and other sources of legal information.

ALM's content plays a significant role in your work and research, and now through this alliance LexisNexis® will bring you access to an even more comprehensive collection of legal content.

For questions call 1-877-256-2472 or contact us at [email protected]

 
 

ALM Legal Publication Newsletters

Sign Up Today and Never Miss Another Story.

As part of your digital membership, you can sign up for an unlimited number of a wide range of complimentary newsletters. Visit your My Account page to make your selections. Get the timely legal news and critical analysis you cannot afford to miss. Tailored just for you. In your inbox. Every day.

Copyright © 2020 ALM Media Properties, LLC. All Rights Reserved.