Read The Recorder‘s roundup of the stock-option backdating scandal. There won’t be a test later … but there might be a subpoena.
“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 inter-viewed 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 July, 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.
