-Wikipedia Bio: Gregory Reyes
To view Gregory Reyes’ bio page on Wikipedia.org, please CLICK HERE. This bio was written by Kevin Freeman on February 4, 2010.
Greg Reyes
Greg “Gregory” Reyes (born September 1, 1962) is an American businessman who most recently served as the Chief Executive Officer (CEO) for Brocade Communications – a technology company that provides networking solutions, management applications for various types of networks, and data storage solutions for businesses. Prior to this role, Greg was the president and CEO of Wireless Access (which was a small private start up company at that time), Vice President (VP) of sales for Norand Data Systems, (VP) of sales and support at Banyan Systems, and has also held a number of sales positions for technological companies prior to his executive experience. Since stepping down as CEO of Brocade, Greg has donated his time to help other executives and has donated his time and money to people in need.
Greg’s sales career began when he worked for his grandfather in Upstate New York, selling cars during his summer vacation.
Greg Reyes’ father, also named Greg Reyes, who emigrated from Cuba to the United States in 1960, was a role model for Greg in the areas of work ethics and dedication to his company.[1]
Rise to Success
After graduating from high school, Greg Reyes attended St. Mary’s College in Moraga, CA, where he obtained a degree in Business Administration in 1984. During his studies there, Greg also obtained an internship with Convergent Technologies in their Sales Department. Greg enjoyed his work at Convergent Technologies so much that he accepted a full time position with the company while taking evening classes in order to complete his studies. Greg’s work at Convergent Technologies was the beginning of an active career in the technology sector at which he excelled.
After completing his degree, Greg accepted a sales position as an OEM sales representative with Convergent Technologies – the leading company in UNIX and workstation servers of that time. Greg worked his way through the sales ranks there, using his knowledge and experience to obtain a position as the Vice President of Sales and Support at Banyan Systems, a networking and data communications software firm.
When asked why he moved so frequently from job to job, Reyes stated that he was determined to obtain all of the skills and experience he would need to become the CEO of a technology company one day. He was finally given that opportunity at Wireless Access – a Silicon Valley start-up company that specialized in two-way pagers. Greg remained the company’s President and CEO until Wireless Access was bought out in 1997 by Glenayre Technologies.[1]
In 1998, Greg became the CEO of Brocade Communications, where he led the company to its Initial Public Offering (IPO) in 1999.[1] Greg stepped down from his position in 2005 after becoming one of the first targets of the Justice Department’s campaign to crack down on corporate stock options backdating – a campaign that was based on an accounting provision called APB 25, which was proclaimed by many to be both vague and ambiguous in its legal implications. The practice of stock options backdating is still deeply mired in litigation and uncertain legal positions.[2] Although Reyes is still fighting the charges, having successfully overturned his original conviction through a successful appeal based on prosecutorial misconduct (The Ninth Curtuit Court of Appeals found that the prosecution knowingly lied to the jury in Reyes’s first trial), he stands to be the first corporate official to be convicted of concealing stock options backdating in the United States if his second trial results in a conviction.[3]
CEO of Brocade Communications
As CEO of Brocade Communications, Greg Reyes successfully sold SAN (Storage Area Network) infrastructure to a number of companies, including IBM, EMC Corp., Compaq, Dell, NEC, and HP. During that time, Brocade also produced Fibre Channel Switches and management software for SAN’s.[4]
During Greg Reyes’ time as CEO of Brocade, the company was the largest manufacturer of networking equipment that provides data storage in the world. Under his leadership, the company went public in May of 1999, growing from a small startup business into one of the largest and most successful technology companies in the Silicon Valley – a leadership position that it maintains to this day. Brocade showed 7 quarters of profitability and revenue growth during that time – in the first two years alone, revenue growth exceeded 150% altogether.[5] In addition, Reyes actively pursued the recruitment of more than 1150 employees, multiplying the company’s workforce by a factor greater than six from 1999 to 2002. [6]
Brocades’ original founder, Seth Neiman, when speaking of Reyes, called him the “best CEO of any high tech company.”[1]
Personal Life
Greg Reyes met his wife in Boston, MA. They now have two young children. The Reyes family has long considered themselves to be deeply religious in the Christian faith, and they have also been supporters of the Valley Christian Schools and the Catholic Curch for many years.
Philanthropic Endeavors
Greg Reyes’ involvement in a number of philanthropic endeavors has been largely kept private, though it has become public knowledge that Greg donated generously to local schools and charities with a focus on helping children in need and the homeless.
He has been an involved member of his community; he has maintained an ongoing involvement with the American Cancer Society and Family Focus: Children at Risk; he has hosted a number of fundraising events for local charities; and after the terrorist attacks that transpired on September 11, 2001, he personally matched the donations of Brocade Communications, making contributions in the amount of one million dollars.
Stock Options Backdating Issue
The Charges
In the SEC’s first corporate backdating case to go to trial or result in a conviction, The Government accused Greg Reyes of backdating company options that were not recorded as a company expense, claiming that his actions were fraudulent by making Brocade Communications seem more profitable than it truly was to its shareholders, investors, and the general public. On August 10, 2006, Reyes was formally charged with securities fraud, falsification of corporate books and records, and violations of related regulations and statutes.
The Trial
Reyes’ trial began on June 18, 2007, making it the first criminal trial in which a backdating prosecution was considered before a jury.
In the trial, Reyes stated that he had no intent to deceive anyone, and that his decisions relied largely in good faith on the accuracy of documentation provided by Brocade’s finance department, which incorrectly accounted for stock options in Brocade’s financial statements that he signed in good faith and with the belief that they had been properly accounted for.
Elizabeth Moore, a key witness to Reyes’ conviction and the only employee of Brocade’s finance department to be called during the proceedings, gave crucial testimony during the trial in which she claimed that neither she nor any other members of the finance department had any knowledge of backdating or fraudulent occurrences within the organization. After the trial’s conclusion, however, Moore recanted her testimony, claiming that she had been bullied and pressured by the prosecution to give false testimony. In a letter to Fortune Magazine she told an editor that she, as well as other high ranking members of the finance department, had been aware of the practice of backdating stock options to rank and file employees.
Moore’s conflicting statements were not disclosed during the trial, and prosecutor Adam Reeves made numerous statements to the jury using Moore’s testimony to support his argument that Reyes had deceived Brocade’s finance department; he presented a diagram to illustrate that no one in the finance department was aware of the backdating; he made statements in his closing arguments claiming that employees of the finance department didn’t have any idea that the backdating had occurred, adding that the government’s theory, based on their investigational findings, supported this conclusion.
Reeves’ misleading statements to the jury were made despite his explicit awareness of the conflicting statements from members of Brocade’s finance department – statements that the jury had not been made aware of in the proceedings. Reeves was also aware at the time of his closing arguments that the SEC had taken actions against other members of Brocade’s Finance Department for knowingly participating in the backdating of stock options at Brocade. In essence, Reeves intentionally misled the jury into believing that Reyes was solely responsible for the alleged illegal activity despite having knowledge that this was, in fact, untrue.
Because Reyes’ defense primarily relied on the accuracy of Brocade’s Finance Department’s reporting, they filed a motion for a new trial on the grounds of prosecutorial misconduct. Despite resounding evidence to support Reyes’ motion, the district court denied the motion for a new trial. On January 16, 2008, Greg Reyes was found Guilty of 10 counts of fraud and conspiracy, including falsifying corporate accounting books and records, and participating in a stock options backdating scheme, though Reyes himself did not profit from the options. Reyes was sentenced to 21 months in prison in addition to a $15 million fine, making him the first executive to be convicted of the concealment of stock options backdating.[7]
The Appeal
On August 18th, 2009, Greg Reyes appealed the district court’s decision in the 9th U.S. Circuit of Appeals.
The district court had based its reasoning for refusing Reyes a new trial on the argument that Reyes’ defense should have sought immunity for, and called upon, those witnesses in Brocade’s Finance Department who were aware of Brocades practice of backdating stock options to prove his innocence during the trial. Although Reyes’ defense did argue this point before the jury, they also failed to call upon those witnesses to support their arguments because they had only been given limited immunity by the government and were unavailable for Reyes’s attorneys to call. However, in their appeal the defense noted that the prosecution had never clearly proven that Reyes was solely responsible for the backdating scheme, as they could not have done since their investigation had actually uncovered evidence to the contrary. Furthermore, it should not have been necessary for Reyes to prove that he was innocent in the face of such a lack of evidence.
Reyes’ defense had made no intentionally false statements during the trial, but the prosecution, in fact, did. Rather than deny their false statements, the government instead argued that the prosecution’s misleading had done no harm, and could not have swayed the jury in any regard. This argument was made despite the legal precedence for a jury to be drawn to an improper verdict due to the weight with which the government is able to make statements, and also despite the Department of Justice’s mission statement to “ensure fair and impartial administration of justice for all Americans.”
In the trial, the prosecution had also made the case, based on their investigative findings, that Reyes had intentionally deceived Michael Byrd regarding the backdating of a stock options grant. After the trial, however, the SEC used those same investigative findings to accuse Byrd of having implicit knowledge of the backdated options grants at issue in Reyes’s trial, and having been aware of the practice.
Regarding Reyes’ appeal, a three Judge panel of the 9th U.S. Circuit of Appeals granted Reyes’s motion for a new trial due to prosecutorial misconduct that resulted in misleading the jury. Judge Schroder wrote in the opinion that prosecutors have a duty to be truthful to jurors and in this case that they either knowing lied or should have known that they were lying to the jury when they told them that Reyes had deceived Brocade’s finance department..[7]
Greg Reyes’ new trial is scheduled to take place in February or March of 2010.
References
- 1. Author Unknown(n.d.), “Gregory Reyes: CEO of his Life”, http://gregreyesceo.com/, Retrieved 2010-02-03.
- 2. Burrows, Peter(2009), “Greg Reyes Exonerated on Options Backdating. Why That’s a Good Thing.”, http://www.businessweek.com/the_thread/techbeat/archives/2009/08/greg_reyes_exon.html, Retrieved 2010-02-03
- 3. Egelko, Bob(2008), “Brocade executive sentenced to 21 months in prison”, http://articles.sfgate.com/2008-01-17/bay-area/17151629_1_gregory-reyes-brocade-communications-systems-stock-options, Retrieved 2010-02-03
- 4. Author Unknown(n.d.), “Products” http://www.brocade.com/products-solutions/index.page, Retrieved 2010-02-03
- 5. Author Unknown(n.d.), “BROCADE COMMUNICATIONS SYSTEMS INC CIK#: 0001009626 (see all company filings)”, http://sec.gov/cgi-bin/browse-edgar?action=getcompany&CIK=0001009626&owner=exclude&count=40, Retrieved 2010-02-03
- 6. Author Unknown (2006), “comp19768”, http://www.sec.gov/litigation/complaints/2006/comp19768.pdf, Retrieved 2010-02-03
- 7. Author Unknown (2009), “18-10047”, http://www.ca9.uscourts.gov/datastore/opinions/2009/08/18/08-10047.pdf, Retrieved 2010-02-03
External Links
U.S. Securities and Exchange Commission
See Also
Convergent Technologies (Unisys)
Ninth Circuit Court of Appeals
Saint Mary’s College of California
US District Court for the Northern District of California
U.S. Securities and Exchange Commission