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By | Austin Modine 19th March 2008 21:43

Ex-Brocade HR chief gets four month prison sentence

$1.25m worth of sadness, humility and regret

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Former Brocade human resources chief Stephanie Jensen was sentenced to 4 months in prison today and fined $1.25m for her part in a stock option backdating scheme.

Jensen must also spend her first three months after her prison term in a halfway house and will be under supervised release for one year.

"I would do anything to be able to go back in time and make different choices and spare others from the impact of all this," Jensen told US District Judge Charles Brewer in San Francisco. "I stand before you today with sadness and humility and regret."

Jensen was convicted last Dec. of conspiracy and falsifying corporate records at Brocade. She and her former boss, then-CEO Gregory Reyes, were both charged with manipulating employee options records between 2000 and 2004 so they appeared to have been awarded when Brocade's stock was at quarterly lows. By failing to disclose the scheme with investors and regulators, US feds say the two illegally inflated Brocade's earnings.

Reyes was sentenced in Aug. to 21 months in prison and fined $15m for heading the financial skulduggery. Both Jensen and Reyes currently remain free pending appeal.

Judge Breyer said that although he believed the sincerity of Jensen's remorse, her sentence would deter other executives from aiding in illegal backdating schemes.

Prosecutors has sought a prison sentence of six months for Jensen, while her lawyer sought probation and community service.

Jensen and Reyes are the first two executives to be charged for illegal backdating. To date, a total of 17 executives have been charged with the offense. Nine have plead guilty.

In May, Brocade paid $7m to settle SEC charges for falsifying reports of income through backdating. The company neither admitted nor denied any wrongdoing. ®

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