McAfee’s former general counsel indicted
Kent Roberts, the former general counsel at McAfee Inc. (fka Network Associates) was charged with seven criminal counts of fraud, nine months after being fired for improper handling of stock options. The charges include manipulating the value of his own stock options to increase his profits and then falsifying records to cover up this misconduct. Roberts faces up to 20 years in prison and as much as a $5 million fine.
Roberts was allegedly part of an ethics committee formed by McAfee in 2002, related to some of the prior accounting problems at the company.
At one point, Roberts was granted 20,000 stock options which carried an exercise price of $29.62. In late 2000, Roberts allegedly altered the exercise price to $19.75. In a 2002 internal investigation, Roberts allegedly recommended that the controller who helped in this alteration be removed from the finance department. It is further alleged that in the same year, Roberts helped to backdate 420,000 stock options owned by George Samenuk, the former chairman and CEO.
It is estimated that McAfee will have to incur a non-cash charge of about $100 million to $150 million to correct this problem.
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