Gayle Spence: the full interview
Gayle Spence, a former director of worldwide sales at Cabletron Systems, and then Enterasys Networks, pleaded guilty in 2006 to one count of securities fraud and then testified against her fellow employees, four of whom were convicted and sentenced to terms ranging from three to 11 1/2 years.
Spence served more than two years in a federal prison, and was released in the fall of 2009. She agreed to an interview with NHBR, as long as she was able to approve the final transcript. The interview took place in late September 2010, and the transcript was returned - with only minor edits -- shortly after Thanksgiving. Here is what she had to say.
SPENCE: Do you know how this got started, the Enterasys investigation?
NHBR: To tell you the truth, I'm not really sure.
SPENCE: Neither am I. Nobody would ever tell me. I asked several times, and was told when it was over I would tell you.
NHBR: Did you go back to them?
SPENCE: Haven't yet. Some parts of me say I never really want to know how it started. Maybe those people are in my life. [Laughs]
NHBR: Why don't we start before Enterasys -- a little bit how you got involved, a little bit about where you come from. Your name was thrown around.
SPENCE: I was born in Maine. Lived in the Kennebunkport area. My father was a lobsterman, and in 1961 we moved to Rochester. My father gave up lobster fishing. He worked in General Electric and I spent all my remaining years through high school in Rochester. As noted in the trial, I was a cheerleader, so that gives me the "rah rah" that everyone heard so much about.
Got out of school. Went a year in Plymouth State College, then three years at UNH. My senior year my father died unexpectedly. My sister lived in Connecticut and my brother lived in Virginia. Being the youngest one and the only one around, I looked after my mom. That May, which would have been senior year - I didn't have enough credits to graduate -- I got in a serious car accident. So I couldn't earn money to go back to school, so consequently I never went back to school. Started working. Never finished my post-secondary education. Several years later, I got involved in the travel business - I was a travel agent and my last position was at Uniglobe Kendall Travel in Rochester, and we actually managed the Cabletron travel account. So voila! that's how I met Cabletron.
I was there for a few years, then Cabletron decided -- they were growing so big that this small office couldn't handle what they were doing -- I ended up leaving the travel business. At that time, I was doing a lot of travel arrangements outside of more personal arrangements. I continued to do that for a few months. At the same time, I was training for my fourth-degree black belt test, so I took a few months off and concentrated on that, when I was called to Cabletron one day. I thought I was going there to talk about a trip. Bob Levine asked me to come visit him, and sure I'll be up and I went in with my notebook and I sat down at this table and he said, "This is Ray and he is going to talk to you for a few minutes."
I started interviewing him, where do you want to go and how much you want to spend and he said, "Do you know why you are here?" I said, "I have no idea." "You are here for a job interview." and I said, "For what?" He said, "for a sales job." I said," I don't think so. I'm not working here."
Two weeks later, I was in the training class. Oct. 2, 1993. I started out as an insides sales rep and worked my way up, doing basically every job in the sales department. I was an inside sales manager, a regional sales manager. I was overall manager for the Rochester, N.H., headquarters office. Then I took over worldwide inside sales. We had an office in Mexico City, Newbury, England, I think it was, Rhode Island, Post Falls, Idaho, and Rochester. I had about 635 people in my organization.
Moving forward to the time when Cabletron was about to split into four companies. You know the history. There were all kinds of changes. Bob Levine retired. Craig takes over. Craig backs out. Don Reed comes in. Don Reed leaves. Craig comes back.
NHBR: Where were you in all this? Were you working under all these different people?
SPENCE: In terms of the chain of command, I worked for someone who reported directly to them. I worked with Steve Tintendo for a while, then Bill Gibney, and then I took Bill Gibney's place. For the most part, I reported to the vice president of worldwide sales. That was a revolving door too.
NHBR: Your husband, wasn't he a bodyguard, a security....
SPENCE: He was director of security for Bob Levine.
NHBR: Bob Levine and not for Craig?
SPENCE: Nothing to do with Craig, no. Luke started with Bob, I would say in 1991, and he worked for him until he retired at the end of the year 2002 and he died Dec. 15, 2003.
NHBR: Were you close personally with these people?
SPENCE: The only person I had a relationship with outside of work was Bob Levine, based on the fact that he hired me and I looked up to him. He is an amazing salesperson. He really understood the art of a sale, what it took to get and keep a customer. He was and still is an incredible motivator.
I think the part that is so hard ... people say a lot of things about Cabletron. It grew fast. It was wild and wooly. It was like nothing could go wrong for so long, and then all of a sudden we hit that bump with Wall Street, missed a quarter and things got a little shaky. I was never aware of anything that wasn't on the up and up from a sales perspective, and I was in the middle of it. I didn't know everything. But I would say I had a pretty good finger on the pulse.
When Cabletron broke up into the four companies, that was just a nightmare. I remember one day I was really sick -- I had gone home from work. It must have been in mid-February. I got a call and I got 13 f-bombs dropped on me and I turned and I went back to work. I was never intimidated at Cabletron. You felt like you wanted to do your best, to go above and beyond all the time. We had what we called a "can-do attitude." You just didn't say I can't do it. But at Enterasys it was just ...
NHBR: Now what was the change?
SPENCE: People at the top.
NHBR: What people at the top?
SPENCE: At this time, Bob was gone. His brother, Ken Levine was gone, who headed up worldwide sales for quite some time. There were all new people at the top. Piyush Patel, David Kirkpatrick, Eric Jaeger.
NHBR: I thought they were with Cabletron?
SPENCE: Kirkpatrick was with Cabletron for a long time on the finance side. Jaeger came from Ropes & Gray. He was an acquisition attorney. Piyush Patel of the Yago acquisition. With those three people, the culture changed. It's funny, Kirkpatrick -- I don't know what it was really like in his department because we were in a different building, but I never heard anything that was crazy in finance about pressure, that we can and we will succeed. The saying that was thrown out there a lot was that "failure is not an option."
NHBR: What about Benson's role on the culture side of things? The old kind? He was obviously there for a long time.
SPENCE: When Patel took over, you didn't see Craig very often. Whatever role Craig had in day-to-day operations, you didn't see him. He wasn't there. He was on the board. Board meetings, whenever they were, they weren't publicized. We didn't know when they were.
NHBR: You said that things were high-pressure, but was there a point when you thought something was wrong?
SPENCE: 2001, when Enterasys was going to go public. As the preparations came to a close, we were first told how it was going to happen. Enterasys was supposed to go public first, and then Riverstone, and then Aprisma and then GNTS, (which was a joke anyway) but then it flipped and out of nowhere - I'm sure it wasn't out of nowhere, it was an orchestrated move. Riverstone went out first, then Enterasys was going to go, and Aprisma was going to remain some crazy part of Enterasys. All this stuff going on. People kept talking about how much money people were going to make when this all happened. How so and so had so much shares, stocks options and this and that. It was just like the old movie with Michael Douglas -- "Wall Street." If I look at that now my eyes wide open -- I should have watched that over and over again because it was corporate greed it at its best. Just get it done!
I remember asking a question, "Is this the right thing to do?" I was told, "Everybody does it. Now get out of here." That was told to me by someone I respected. I remember shaking my head and going, "Oh my God."
NHBR: What was the "right thing" you were thinking about at the time?
SPENCE: This was in reference to investing in other companies, the three-corner deals that they became known as, and everybody does it. So the person turns and looks at me. "Everybody does it" and went back to the computer. "Get out of here."
NHBR: Who was that?
SPENCE: You going to print it?
NHBR: You have the final word about what you say.
SPENCE: It was David Kirkpatrick. I scratch my head and say these people at the top -- they knew everything that was going on -- it is something that just makes you wonder, you know.
NHBR: What do you think?
SPENCE: It almost makes me think that those three are the ones that went and started this whole thing so they could get immunity.
NHBR: They never got immunity. Fiallo got immunity. Another person at the top.
SPENCE: You know, the day I pled guilty, I said to (prosecutor) Bill Morse, "I'll give you 30 days, and Henry Fiallo will be on your doorstep." I got a phone call 23 days later he came in. Because I'm like, "Hey folks, Hello?" If I'm guilty, if I am standing up and saying, I did it. Call me stupid. But I'm going to stand up and take my licks here, because it is the right thing to do.
Did I understand what I was getting myself into? Heck no. When I realized how bad it was, I buried my head in the sand. And I shouldn't have ...
NHBR: You said this is when it happened, but what happened that made you concerned? Do you remember specifically when something that you made you realize that something was not right?
SPENCE: Well, when the three-corner deals got out of hand and we were given a quota of what needed to come in for business. When it first started it sounded like it was a noble thing to do. Here is a company that has a lot of cash. It was a way to invest in companies and give them a leg up. Technology is expensive, but then it turned and it was like we were force-feeding people.
People would say, "I don't want to do that," and they would say, "You find a way to make them do it. Make them sign. Make them enter into an agreement."
NHBR: Who was saying that?
SPENCE: One of the big three.
NHBR: You mean Kirkpatrick, Patel or Jaeger?
SPENCE: Mmm hmm....
NHBR: When you realize this was wrong -- could you pinpoint? Was there a specific time?
SPENCE: It just all started before we did that one-month quarter. September. If things could go wrong, they went doubly wrong. Remember, we just closed a quarter, go public and in the midst of closing a quarter we had September 11th. I lost so much respect for people in that month of September because all I could think of was the thousands of people that lost their lives, our customer base that was so incredibly impacted, the state of the country and all they were worried about how we were going to look to Wall Street. Like, who cares? Our country was in crisis. Let's face it.
If you look at the stock market in that first, well take the whole month of September, and after 9/11 -- ... whether it was that the market was soft or people weren't investing, the whole country was stymied. I was doing deployment of emergency re-creation of networks. I was working with engineers and salespeople in the field, they redesigned the network with whatever we had available to put in place as an emergency backup system, and then I would authorize the equipment to be shipped and deployed.
At the same time, we were working a kiosk system using our wireless technology. We were doing it with Microsoft and another company whose name escapes me. I was involved with that, and I was literally getting calls 24 hours a day. September 11th, 12th, and then Sept 13th. That was the infamous date when I told Gary Workman I didn't care where he was, if he was on the moon, he needed to get this paper signed. The Ariel deal. All this is going on.
I could have cared less about that Ariel deal. I'm busy 24 hours a day, and getting up in the middle of the night checking my Blackberry. Did something ship, you know? They are worried about this Ariel deal. That got me.
NHBR: It [Ariel] wasn't the third-party deals. It was the third-party deals that was the main thing that was wrong?
NHBR: [Ariel] was just this one deal with some backdating that occurred in Asia.
SPENCE: Right. Take my advice, if someone asks you to do something when they could actually do it themselves, walk away. I didn't have anything to do with Asia. I never had anything to do with Asia. This is the one time I'm asked to bird-dog something. Can you make sure that this thing gets signed? I get stung. God, how stupid could I have been? But you are in the heat of the moment. You have somebody above you asking you to do something, and all you want it to do is just go away.
So I said, "OK, fine." I didn't have anything to do with it. I was told that the purchase order came in, from a sales perspective I think that the purchase order came in before the end of the quarter. All right, this is legit, let's get the rest of the paperwork lined up. This is when I realized - hindsight - that GAAP isn't the place you go buy clothes! It is the GAAP that you have to worry about. I had no idea I broke the law. None. When they came back to me and asked me about that, I said, "Oh yes, that is my signature." They said you did this. I said that's my e-mail right there. So you are saying you did this, and I said yes. Are you saying you are guilty for doing this? I said, I told you I did it. So I guess I'm guilty.
NHBR: Can you go over the e-mail you sent?
SPENCE: What happened was the purchase order came in before the end of the quarter. From a sales perspective, that's what we look at the day the purchase order was received.
NHBR: So you could use that for revenue.
SPENCE: For revenue, right. However, finance decides to recognize it, take it all, a piece of it, whatever. From a sales perspective, that's a bookable purchase order. But there was some verbiage on the purchase order that attached the purchase order to a letter of agreement
NHBR: Right, which had to do with being able to return stuff, which means it may not be a sale and that letter was not in the files that went to the auditors. But your e-mail in this part?
SPENCE: My e-mail was to Gary Workman and David Boey to tell them per Bob Gagalis they need to make sure that the letter of agreement matches the date on the purchase order and get rid of the terms. The terms were the return privileges and the length of time they could pay for it too.
NHBR: Now what you were saying or thought you were saying was that you can't use those terms because then it won't be approved. But what the prosecutor is saying is getting rid of the terms means hide the terms so the auditors don't see them. What did you mean by that?
SPENCE: I thought just take them off the letter of agreement.
NHBR: So that the auditors didn't see it?
SPENCE: No. I never knew what the auditors saw and didn't see. Whatever on the sales side that we gave to finance -- a purchase order, a letter of agreement, whether it was a response to a bid or a contract, any paperwork -- I don't know what they saw or did not. From a sales perspective, in order for an order to be legitimate, if it was a staged deployment or, if it was an instillation, you have 90 days' right of return if you didn't like it. If you have a right of return, you can't take that as a sale. Yeah, you can take it as a sale, but you can't take it as revenue. So, however finance works, if they say we are not going to take it this quarter, we are going to take it next quarter
NHBR: You wanted to get those terms removed so it would be a sale, but you didn't want those terms hidden somewhere?
SPENCE: From my perspective, when that PO came in, it was already a sale. But from the finance perspective, they needed their paperwork and legal needed their paperwork. When I think back on it, why did they ask me to get involved? I'm in sales. This is a finance or a legal issue.
NHBR: I'm getting a sense that at least morally you were innocent of this whole Ariel thing, but I think that morally or in your conscious you were guilty in participating in the three-corner deals. Is that a fair statement?
SPENCE: From the Ariel deal, I didn't think what I did was wrong, but upon being educated based on the company being a publicly traded, since the purchase order was recognized for revenue ... so my actions, by pushing this paperwork through, allowed the company to make the quarter. So yes, I am guilty for that. I didn't have some nefarious intent. I was pushing it though based on a request from Bob Gagalis, and if you looked at the e-mails that surround that time frame, which was probably September 9th or something like that -- it was like I was a parrot. I was repeating what he said he wanted taken out of the letter. OK? That's what he said. From a sales perspective, we had a purchase order, it is signed, and the terms are net 30 or net 45 -- I'm good with that. I have a clear conscience on that transaction because I know that I would have never been involved in it if I hadn't been requested to be.
From the three-corner deals -- again, I thought they were great from the beginning. My angst is that I did not follow my gut. I should have walked away. When I asked about it and was dismissed, I should have just said, you know what? Get out of here. There are other jobs out here. You don't have to play this game or drink this Kool-Aid anymore. Because if I would have walked away I would have never been questioned about Ariel. Actually if I left the company at that point in time I would have never been involved in Ariel because Ariel was after. Ariel was in September.
NHBR: So when was this conversation with Kirkpatrick where he said, "Get out of here?"
SPENCE: Either the end of Q1 or early on in Q2. Q2 was right off the charts in terms of them wanting to make the numbers because the company was going to go public and all these people were going to make a ton of money.
NHBR: I want to ask you about Gagalis. He got the most in terms of jail. He maintains that he just walked into this thing, didn't really know what was going on and is basically a patsy. What do you think?
SPENCE: It's a shame. My heart goes out to him and to his family. By the time he realized there was something wrong, he had already signed his name too many darn times. I really wish ... I think he got some bad counsel. I think he should have cooperated. Bob Gagalis is a nice man. Whether I got into trouble for what he asked me to do or not, I don't blame it on him. He was with that company for such a short length of time.
That guy came in the door and had weeks before we went public. He must have felt like he was drinking from a fire hose. He had people on him all hours of the day. He must think everyday of his life now, "would of, could of, should of." He should have run. He should have left, but he didn't and he also didn't speak up. I do not know why.
NHBR: You think he knew stuff that was going on that was wrong?
SPENCE: I think he could have saved himself 11 1/2 years in jail. I think he should have cooperated. I think someone gave him some bad counsel, that we could get you out of this. I mean -- come on, not in this day and age, when you have so much stuff written in e-mails. I'm a note taker, I write notes and I save my notebooks and so forth.
I don't know if you are aware of this, but early on, because we were all indicted together, we formed a cooperative where everybody would share information. I got out of it because I knew what I did and it was wrong -- I was not going to act like I did not do anything wrong.
NHBR: What did you do that was wrong? You said the Ariel thing that basically it's technically wrong but in your conscience you have no problem with it. On the three-corners, what do you think looking back now was wrong?
SPENCE: Basically buying people's business. Using the company's money to buy product in someone else's name. If I give you a loan I say, "Here Bob here is $1,000, now I want you to go over here take $950 of it and I want you to buy this product from me and then the other $50 you can use to do some marketing." And you say, "I don't really know if that's a good idea." "Well you just sign here, it will be fine, and don't you worry about it. We are going to send some more business your way."
Then all of a sudden, you got the product and "I don't have any place to put this." [Laughing]
NHBR: Actually I did an interview, you might have read it, with that person up in Rochester.
SPENCE: Michelle Winder?
NHBR: Yeah. All of a sudden we have this stuff in the warehouse and it just shows up there. They said take it.
SPENCE: Whatever happened to her?
NHBR: I haven't talked to her in a long time, since we did that interview.
SPENCE: That article came out when I was away. That was horrible, horrible, horrible.
NHBR: What was horrible?
SPENCE: Oh God, every time I heard the name Final Mile [the company Winder worked for] I wanted to vomit because they have a warehouse full of product -- because it was a can of worms. I would get a call from David Kirkpatrick saying, "You have to move that product." Why me? I said, "They took it, that's their issue. I don't want anything to do with it."
Then she gets calls from finance, trying to do a collection on her. I can imagine her saying, "Collect on what? I should be charging you storage fees!"
Right there -- the part that always bothers me was why didn't I speak up. Why didn't I speak up? That is not my personality. What happened? Because I tell people what I think. I just wanted it to go away.
I was told by Bob Gagalis that after the end of Q2 this isn't going to happen anymore. I really believed that everything was going to be OK. In September, which was just an abomination everything blew up. We didn't make a third of the number. We needed to make one-third of that quarterly number. That didn't happen. Then we get into Q4, October, November, December, we were changing our year to a calendar year. The country still reeling off 9/11, and I thought we are just not going to make it.
All of a sudden, I get the call about doing another three-corner deal. I thought we weren't going to do this anymore. Based on their (the investee's) contract they have the ability to get a second investment.
NHBR: Who is talking to you now?
SPENCE: Bob. Somebody must have come to him about this because this was not something he would have known because it happened before he started with Enterasys. He pulled out the paperwork and I said, "forget it, we don't need to do this," and he said, "Yeah, we may need the revenue." I didn't want to do it, so I dragged my feet. I was rude on the phone to the company -- I can't think of their name - I didn't want anything to do with it. I was just, "Oh no, I don't want to have anything to do with this godforsaken thing."
NHBR: But you did anyhow?
SPENCE: No, not really. I had very little to do with it. I think the only thing I did was put the order in. Here is a piece of paper. I passed the order though. "No, we aren't going to do this anymore" -- that's what I was told and these people -- no. I'm done.
Then we moved to Portsmouth and all of a sudden Henry (Fiallo) stopped coming to work and I wondered what was going on? "Oh he's got stuff and he's working from home." No, we moved to Portsmouth because that brought him closer to home. He lived in Hampton Falls. This is weird. What is going on here? And I finally find out a couple of weeks later. Sometime in February, is when we found out the SEC started an investigation on the company. I was like aha! -- that's why he isn't coming in, because he was a wreck. He knew!
The first time I remember being asked about Ariel was by Ropes & Gray. I thought, "You have got to be kidding me."
I keep everything. I kept paperwork, notebooks, and everything. I had this step file and I said "here is the whole thing." They were blown away. I didn't know what I had. I just had the paperwork right? I stuck it in there and who knew, I had it all.
NHBR: You had the change in the order. I thought it was in Asia?
SPENCE: I had the fax of it. I had the order, and the notes, the directive and so forth. But what I never knew, I never saw the final version come back in, and I never knew until Bill Morse asked me if there was a side letter written. No idea. Never saw it. Never heard about it.
NHBR: Which is where the terms went back in that you asked to be taken out?
SPENCE: Uh huh. They wrote it in the letter.
NHBR: When you heard that SEC was getting involved, how did that make you feel? Were you worried?
SPENCE: No. No. I wasn't worried at all.
NHBR: I thought you kind of knew that the three-corner deal thing was wrong.
SPENCE: They were asking about so many things. I thought this is a finance thing. I thought it was wrong, but the finance people were all over it. The lawyers wrote all the agreements. They'll figure it out, right? If there is something wrong, it's between the legal department and the finance department. You know, they'll take care of it.
I left Enterasys in April of 2002.
NHBR: And why did you leave?
SPENCE: We were having another round of our infamous layoffs.
NHBR: So it wasn't because of Ariel or the three-corner deals or anything like that?
SPENCE: No, we were having another round of our infamous layoffs and ...
NHBR: Can I go back to one thing? You talked about the "big three" being involved in all this and knowing about it, and by the "big three" you mean Jaeger, Kirkpatrick and Patel. Do you have any sense of Craig Benson's knowledge or involvement in all this?
SPENCE: It would be unsubstantiated. He was on the board. He was on the audit committee. He talked to those guys all the time. I don't know. Maybe he was doing the "don't ask don't tell" [Laughs] -- I don't know. Maybe he didn't want to know. If you are making your numbers, everything is OK. I really don't know.
NHBR: You were so distant from him that you didn't see him. Who did you mainly deal with these three-corner deals?
SPENCE: The three guys -- Kirkpatrick, Jaeger and Patel.
NHBR: And you told the investigators this?
NHBR: And they weren't charged. What do you think about that?
SPENCE: God will take care of it. Everybody has their day of judgment. I'm OK. I'm OK with it. For me, I will never have a knot in my stomach over this again. I don't have to wait for another shoe to drop. I don't have to look over my shoulder. I told the truth. I stood up. I paid my debt to society. I'm not proud about what I did. I'm proud that I was able to keep it together personally, professionally. Through the whole legal process I was employed. I've always been employed. I came home from prison on a Tuesday and I went back to work the following Monday. I'm a good person. I'm a great employee.
Based on what I've been through and what I've experienced, I think I am an asset to any company who has the desire to go public or who is currently publicly traded. If I even have a sniff that something is wrong, my hand is going up. Somebody told me that the best employees are federal felons because they will be forever watched by the federal government.
Being away for 21 months was a tremendous learning experience. You learn very deeply who you are and what makes you tick. You also learn about your family and your friends. I am so incredibly blessed by having a great support system. No one walked away from me. No one. In fact, people who I hadn't seen in years wrote to me and extended their well wishes, their support. I turned the big 5-0 when I was away, and on my birthday I got 137 cards. The CO (corrections officer) said to me, "Who are you?" And I said, "just Gayle." It was wonderful.
One of the things you think when you are away is that people are going to forget about you, and it didn't happen. Not at all. Being in prison is a different world.
NHBR: Let's just step back to Enterasys a minute before we go there. In terms of the "big three." Are there concrete instances with these three-corner deals where Jaeger and Patel were involved?
SPENCE: Uh-huh. They were involved. They were at every meeting.
NHBR: Every meeting where these three-corner deals were involved?
NHBR: Did they say stuff or were they just watching? Do you remember specific things?
SPENCE: Lots of expletives [laughs]. It was a long time ago to repeat exactly what they said.
NHBR: Well there might be a couple of things that remain in your mind that you can still remember.
SPENCE: I think I'd be better off not trying to cite a time or a place. They were present at the weekly meetings. They received the spreadsheets that were maintained. If they weren't physically there, they were on the conference calls. If someone would say "OK, this deal is not gonna work out," they would say, "Why don't you try harder? Push."
NHBR: When you say "they," are you talking about all three?
SPENCE: It could have been any one of them at a given time, but David had a big board in his office, a big white board that had doors on it, and he had every deal sketched out on his board. He kept track of them, not in a notebook and not in e-mail, but on the board.
NHBR: Whiteboard right?
SPENCE: Yes. Which can be erased.
NHBR: And Patel, was he there mostly on conference?
SPENCE: The meetings were always held in Building 36. If he was around, he was there. If not, he'd be on the call. Same with all three of them.
NHBR: And Jaeger. Anything you remember about him?
SPENCE: He was a yeller.
NHBR: A yeller?
SPENCE: Yeah. He liked to raise his voice.
NHBR: Like what kind of things did he yell?
SPENCE: He always raised his voice, probably to intimidate people. There was something that came to light in the trial regarding one of the deals. He got personally involved in one of them, but I can't remember what it was.
NHBR: I vaguely remember there was an e-mail that was pretty graphic.
SPENCE: The expletives. The raising of the voice. The calling on the phone many times over. Like hammering somebody. It was like he was beating them into submission.
NHBR: We are talking about Jaeger now?
SPENCE: Pretty much, all three of them, but Jaeger -- I didn't realize it -- boy, he could just get fiery. I didn't have a lot of dealings with him. He was part of that group, but I can't say one-on-one dealing with him. I never felt his wrath personally, but I heard him come at other people.
NHBR: So let's move ahead to when the SEC was coming and interviewing you.
SPENCE: Actually, I went to Boston in 2002 for two days to be deposed by the SEC.
NHBR: So at that point did you start getting worried? When did you start getting worried for yourself?
SPENCE: In all honesty, Bob, I didn't. I thought I had such a minor a role in this stuff that I really wasn't worried at that time. I was there for two days, and then I never heard from anyone again -- until I think it was the summer of 2003. There was a knock at the door. I was upstairs. Luke said to me, "Gayle, the FBI is here to you see you. I was like, "Yeah, right." He said, "I am serious."
He showed me the card and I was like, "Oh my God!" I went downstairs, sand it was Charlie Voukides and Bill Ricker, you know Mr. Ricker, from the postal service? They were at my house and wanted to talk to me. I was so dumbfounded and I said, "Gentleman with all due respect I think I better call my lawyer."
That's when I went whoa! You know, I live in Newfields, N.H. Not every day when you have the FBI show up at your house on a Saturday afternoon. I didn't have a lawyer. I had a lawyer for the SEC deposition, but I didn't hire that lawyer. Enterasys did. I was rocked back in my shoes. The FBI! I did not hear from them again until April 6, 2004 -- my sister's birthday -- when I got a call on my cell phone on my way to work, and it was Charlie Voukides and he said, "Ms. Spence," and I said, "Yes?" "This is Charles Voukides from the FBI, and I just wanted to let you know that you are the subject of a grand jury investigation."
And I said, "For what?" He said this is in reference to the Enterasys investigation. I said, "Sir, my husband died in December. I'm going to bury him on Saturday. Could I get some time? Can we meet? Can I talk to you?"
He said, "Oh yeah, take all the time you need."
Tuesday, I received my indictment papers. I had buried my husband on Saturday. I was blown away. Sixteen charges! I couldn't believe it. I couldn't think straight. Was this really happening to me? Signing statements to auditors -- I didn't do that. I was indignant. So anyways, I had to get an attorney. Peter Gelhaar out of Boston was a former senior U.S. attorney. He looked over everything, and we discussed the charges, He represented me when I went in for my plea at the indictment. It was just crazy. I did not do anything that was written on that indictment. I would have gone down in flames.
Over the summer, I retained the counsel of a New Hampshire attorney, David Vicinanzo from Nixon Peabody. We were having a meeting with Bill Morse. I was getting very anxious.
I said to him, "If you are so intent on finding me guilty for something, then find something I can look at my 85-year-old mother (at the time) and say I did because this I did not do." That is when they showed me an e-mail and asked if it was mine. Yes, it was. I sent it. My name was on it. OK. Deal done. That is how fast it happened.
NHBR: Was your lawyer there? Did you talk to your lawyer?
SPENCE: Yes. My attorneys were always present with me. I pled not-guilty at my indictment hearing in May, and between May and Aug. 29, I pled guilty to the one charge of conspiracy to commit securities fraud.
NHBR: And that is related to Ariel.
NHBR: The thing you really feel innocent about is the one thing you pled guilty to. Anyway, you pled to that, and that time you started telling them about everything else?
SPENCE: Yes. It was part of my plea agreement. That is when they began asking me about the three-corner deals. I think they knew some of it, but I don't think they knew how big it really was.
NHBR: So was it mainly you who told them that?
SPENCE: I don't know. I created some graphics for them and it ended up being used in some of the demonstratives in the trial. It was too confusing -- it was difficult to follow, to figure out.
If the auditors couldn't figure it out and the auditors were involved in the business to the point that they understood the lingo, the processes and so forth, how were these guys going to figure it out? They thought we spoke in code. We didn't. It was just the jargon that was spoken in our business.
NHBR: Did David Vicinanzo or Peter Gelhaar recommend that you plead? You said for a while everybody was in it together.
SPENCE: Right. Because David and Peter having both been in that role in the U.S. attorney's office basically said the train has already left the station. They are going to get you for something. This is huge. You have to take this seriously. It was against my grain to plead guilty to something I didn't do. I didn't speak to auditors. I never signed anything. I didn't prepare bogus financial reports. I didn't do any of that stuff. I can't own up to something that I didn't have involvement with.
So that's when it came out about Ariel and that was the agreement, part of the agreement was that I would become a state witness and cooperate. I did -- for over 300 hours.
NHBR: What was that like? Did you talk to some of the other defendants or heard through the grapevine with them?
NHBR: So you had no idea how they were feeling towards you?
SPENCE: (shakes head) No.
NHBR: So how were you feeling? You used to work with these people?
SPENCE: In prison, they would have called me a rat or a snitch. Everybody had the same opportunity. I wasn't turning state's evidence to save my bacon. I was already in it. They had the same opportunity to do the same thing that I did. They could have a made a deal. I made a deal. Somebody told me, "You made a deal with the devil." I didn't really do that. I made a deal because I did something wrong, and along the way I mitigated my exposure.
It is not a comfortable feeling to sit there and look at people that you spent a lot of time with working side by side with.
The thing is, I didn't testify on hearsay. I didn't testify against them in spite or have an ax to grind. I'm not mad at any one of them. I've never said anything ill about any one of them. We are all collectively a victim of some horrible circumstances, which we all could have used better judgment in.
When I testified, I testified based on e-mails - thousands and thousands of e-mails -- that were put together as evidence. Spreadsheets. I was lucky. I had good counsel. They held my hand every step of the way. The offense level for the one count was up to five years. I prayed I would get a lot less. I got 27 months. I served 20 months and 20 days. I didn't get off easy, and I will say I got the message even before I self-reported to Danbury. I got the message loud and clear. I think that any one of them had the same opportunity. The only requirement was to plead guilty.
NHBR: Do you think the right people went to jail?
SPENCE: No. But then again, everybody will have their judgment day. I watch prison legislation and I pray that the legislation that is talked about now by Rep. Danny Davis out of Illinois, that will allow federal first-time nonviolent offenders over the age of 50 to actually only serve 50 percent of their sentence. That means that anyone remaining in prison would come home sooner. Because just like me, they got the message before they got to prison.
About prison. Yeah, it removes you from your family and changes a lot of things. If you don't need discipline, it doesn't do anything else for you. For a lot of people, it makes them angry and sick. I pray that they can all come home, be with their families and have their remaining years, feeling like I do now. Just a million pounds have been lifted off of my shoulders. This has been a lesson in life that has changed me forever. I am grateful for each and every day that I am home.
NHBR: Tell me a little bit about when this was all over and you were sentenced, and you got 27 months. What was that like when you heard that sentence? Was that what you expected?
SPENCE: No. Some people said, you'll just get probation. I knew that wasn't going to happen. I knew I was going to do some time. But I thought maybe a year and a day. That is what I was thinking -- hoping. Then I was told, a week before my sentencing, that it was recommended 27 to 30 months by the prosecutor. The judge went on the low end - 27 months.
NHBR: So it wasn't a total shock in the courtroom.
SPENCE: I had a few days to prepare for it, but because it's a federal judge and it was a recommendation, he could have gone up or he could have found a moment of sympathy and gone lower.
NHBR: What do you think of Barbadoro [the federal judge in the case]?
SPENCE: He was doing his job. They have latitude to tell you the way it is and give you a little bit of the lecture along the way. As he said during my sentencing, "Ms. Spence I know I'll never see you in my courtroom again." OK, you know that's right. If that's all it takes, can I just go home now? [Laughing]
Prior to this, the worst thing I ever did, was get stopped for speeding or get a parking ticket. That's it. I'm not into this whole thing. I laughed when I was away. Some things I said along the way to lighten the load. My family and friends worried about me so much. I would tell them, "When this is over I'm firing my travel agent because this is the worst trip I've ever been on. It's been incredibly expensive. The accommodations are terrible. The beds are hard, the people are noisy, the food is awful and I would go on and they would laugh."
The other thing, my girlfriends were really, really afraid for me. I said, "Look guys, the one thing we know for sure is this is not a death sentence, OK? I'm coming home. And I'm going to come home, not a project for someone or a train wreck. I'm going to come home in the best physical and mental shape that I've been in years."
And I came home. I don't dream about my experience. I've never had nightmares. I'm not jumpy. If I hear a set of keys -- because the guards walk around with keys all the time -- I do not have any issues from the experience. Only an immense amount of gratitude for the life I came home to.
NHBR: What is it like, going in, a middle-class type of existence, and all of a sudden you are with all these people who broke the law for some reason or another -- a lot of them not from your upbringing? What was that like?
SPENCE: So David Vicinanzo said to me, Gayle don't worry. When you get there ...
NHBR: Which prison did you go to?
SPENCE: To Danbury. The federal prison camp, the women's camp as opposed to the FCI (Federal Correctional Institution). I wasn't behind bars.
David said, "Gayle, don't worry when you get there, they are all going to look like you."
I self-surrender on a Friday. Little did I know Bob, the camp had lost water. So they stuck me in a place called the SHU -- Special Housing Unit - and I'm trying to tell them, "Excuse me? I don't think I belong here. I'm supposed to go to a camp."
The COs said, "Yeah, don't worry about it." Bob, they gave me orange clothes. Everything was orange. Orange top. Orange bra. Orange underwear. They gave me a size 10 pair of underwear. They were out like this. I had to wrap them around AND stick them in. My pants were too big. My shoes were too big. My socks were falling off. Oh, my God. Now this is my first day.
They stick me in a room, in a cell. I'm handcuffed. I'm shackled. I couldn't have escaped. I'd have to have a map. I didn't know where I was. They put me in the cell, by myself. The toilet didn't work. Then they give me food, I looked at it - I don't eat beef. I'm pretty cautious about what I eat. This was liver that had been cooked for days. I am not eating this. They gave me sugared Kool-Aid. I don't drink sugar. I am in deep poo-poo. I'm going to starve to death. [Laughs] Then, starts the lingo. The swearing. "I'm your baby's daddy's mamma." I was totally confused. I thought something was really wrong, like where am I? I'm going to be here for two years, I'm going to die. I started writing notes to Dwight. I don't know where I am. If you never see me again... [laughs]. I'm lost.
Long story short, I stayed there four days, then they came to get me and move me to the camp. Of course, the whole time I'm at the SHU, I don't see anybody, I don't know if they look like me or not. They sure don't sound like me! Then I get to the camp and I open the door to go in -- it's kind of like this long low building and there is a drop, and I open it.
All I could think of was what David said to me: "Don't worry Gayle they all look like you." I open the door and I think, "Oh no. I'm a little white woman -- I'm in big trouble."
I had phone privileges and when I called, my first words to Dwight were, "Scary daddy scary. Nobody looks like me. They don't sound like me. And they don't act like me." [Laughs].
I have often said that nothing can prepare you for the journey. There are lots of books out there and I met with a psychologist before I went who counseled prisoners. I met with a couple of women who had been in prison. Nothing they told me was like Danbury. At the time, I was there, there was probably 70 percent black and there was a pretty large population of Spanish women. The 5 percent was everything else. White, Asian, Indian. I kept my head down. I listened. I wasn't too quick to interject or offer advice. I stayed to myself. I didn't treat anybody any differently than I would have if I met them on the street here.
My best experience was when I began teaching school. I taught English, reading writing and reading comprehension to pre-GED, which was grades 5 through 8, and GED, grades 9 through 12. My students were anywhere from 19 years old to, I think, 63.
One of my students, her street name was "New York," she so wanted to hate me. She was brought up being told by her grandmother that all white people were evil, and it ended up that she had tried for eight years, Bob, to get her GED. Never could do it. I taught her about writing and expressing her feelings. I never let my students use slang or any other language except for English in the classroom. This lady, New York, passed her GED after I left, and Dwight sent her a card to say congratulations. I remember the night before, she came to see me, and she started to cry, and I said what's the matter and she said, "No one ever told me I was smart before."
Here was this woman that wanted nothing to do with me crying in my arms. I will never forget her as long as I live.
NHBR: What was she in for?
SPENCE: She was in there for a drug crime. She had a 12-year sentence or something. I didn't try to be somebody I wasn't. I wanted to help them. I truly wanted to help them, but I also wanted to learn from them. The funniest thing was that these women were so different than me, I thought, but they really weren't all that different. They made a mistake and they wanted to go back home and be with their family, friends and get a second chance.
I talked to them about sharing their stories and making sure their children understood where they made their mistake so they didn't make the same mistake. I used to joke with the women and tell them I never signed up to go prison. I believe the journey made me a better person. I spent a lot of time working with charities and never really understood how people got themselves into certain situations. Now having experienced firsthand, hearing people's stories, I can see how it happens.
One of my students was a drug runner starting at the age of 3 -- seriously. I mean come on. She didn't have a chance. She was arrested her first time at 14 and put in a juvenile detention center and then just over and over and over again until she was drug-running and crossed the border, state to state and that's how she arrived in the federal system. She needed to get her education. She was smart. God, was she smart.
Some of these ladies that were involved in drugs -- let me tell you they knew the metric system ... [laughs]. They had the metric system down and money down. When we are talking about math, think about it, it is just like doing a deal -- and you can do that in your head. They could do math so fast.
NHBR: So what was the worst in terms of what they were in for?
SPENCE: In the camp, you could not be there for a violent offense. A lot of drugs.
NHBR: Anybody in there similar to you? Some kind of financial crime?
SPENCE: Yeah, there was a lot of embezzlement.
NHBR: Any corporate fraud stuff?
NHBR: Any companies that we might recognize?
SPENCE: I was going to tell you somebody, but I forget now. A lot of bank fraud. Several people who were branch managers, district managers.
NHBR: More like stealing from their employer type of thing. Not the kind of thing you were ....
SPENCE: No. I don't know there was anybody in there that I met at the time for securities fraud. What they could never figure out was that I never got anything for it. [Laughs] I never made any money, so in their mind I wasn't a good criminal. Most of them got money or they sold drugs and made money.
NHBR: You got paid pretty well during your time.
SPENCE: Yeah, yeah. I put a lot of hours in too.
NHBR: So did the drug runners.
SPENCE: Yeah, they do. It's funny you realize, that people who live a life of crime, involved in the drug world, they really didn't mind being in prison because they were safe. They got a good night's sleep. They didn't worry about where they were going to sleep. They were fed. Maybe it wasn't what you wanted to eat, but there was food and they had a roof over their head.
NHBR: When did you get out?
SPENCE: I came home back to New Hampshire on June 9  and I spent six weeks in the federal halfway house in Manchester. I went back to work on June 15. I moved home from the halfway house on July 27, and I was very restricted. I could go to work and call when I got there, call when I left.
If I wanted to go to the grocery store, I could go, but it had to be planned. I couldn't be away from home more than two hours. If I had an appointment -- everything I did, every stop I made, I had to call from a payphone, let them know when I arrived at the grocery store. Call back when I was leaving the grocery store. Call when I got home. Believe me -- it really wasn't worth going anywhere.
On Oct. 2, I transferred to supervised release.
NHBR: So it was about almost a year ago?
SPENCE: I've been physically home full time since July 27, 2009, and as of October 2nd have be on supervised release for one year of a two-year sentence and I'm hoping, praying, that I will receive an early termination. [Editor's note: Judge Barbadoro granted early termination two days before Christmas.]
NHBR: For the supervised release?
NHBR: So what do you still have to do?
SPENCE: I submit a report once a month, reporting that I'm employed. How many miles on my car. How much money I have in the bank. How much money I made. How much money I spent on bills. I can travel across the border 75 miles, into Massachusetts or Maine, Vermont. I can travel outside of the area, but I must have permission.
NHBR: So you said you started working right when you got out. What kind of job did you get?
SPENCE: I was consulting in technology, doing business development, and I stayed there for a couple of months, and then I moved to my present job. They recruited me, even knowing where I've been. I started out as director of sales, and after I was there for six months, I was promoted to vice president of sales and director of technology services.
NHBR: So how did they know about you? Did they know about you through the trials, the publicity?
SPENCE: The Cabletron network.
NHBR: So they may have heard from people they knew from Cabletron, that she is out, she can work, and they called you? It was more like networking.
SPENCE: Yes. They interviewed me at the halfway house.
NHBR: Oh really?
SPENCE: So you know that they really wanted me. [Laughs]
NHBR: You mind giving the name of the company?
SPENCE: It's a small company, privately held, very different from what I did in the past. We do records management systems, in health care, to help doctors, physicians and hospitals stay organized with patient records, and then staff records.
NHBR: They located in New Hampshire?
SPENCE: No, Massachusetts. We also do a lot of work in the legal field, the same way -- legal files and education, human resources. My work ethic is who I am. What happened to me, the conviction, is not indicative of whom I am.
NHBR: So you said that since you've been out you've talked to business schools.
SPENCE: I spoke to a business class at the University of New Hampshire in October, last year. It was a Friday morning. It was probably about 80 students in this auditorium. I have been asked to speak again in December.
NHBR: Was this a classroom, or were you a featured speaker?
SPENCE: It was a classroom. It was a business class. I was invited to come in as a guest speaker. I had a suit on. They introduced me. The students had no idea. All they knew was I was a businessperson. I started off by saying, "For 20 days and 20 months, I had no first name and I was referred to as Spence or 03418049. I was a prisoner in a federal women's prison camp. You could heard have heard a pin drop.
I said, "Good morning. Now that I have your attention ... I know what Thursday nights are on the campus of UNH, so, could you all sit up straight. Turn your iPhones off. I promise the rest of this discussion will be quite interesting."
And I got personal notes from 80 students. I asked them if they could take a moment at the end of the discussion to give me their feedback. I said, you know, "I'm fresh out of prison. I think I have a great story to tell but you are my first audience, so I'd like for you to give me some feedback."
NHBR: So what did you tell them?
SPENCE: I told them about what happened. That I pled guilty to this offense. Talked to them about the corporate culture, and about what you learn in a classroom is one thing, but what you learn in a corporate environment or a business environment is oftentimes contrary to what you are taught. You need to trust your judgment. You need to follow your gut. If it doesn't feel right, don't do it. Walk away. You will have lots of jobs in your life. Take it from me.
I probably spoke 15 to 20 minutes about the whole thing. What I wanted to do and what I thought would work out best is if we had an interactive discussion. Is there something about business, the company that I worked for, what happened that you want to ask me about. Is there something about my prison journey that you want to ask me about? I will abstain from anything I think is off-color because everyone wants to know what happens in prison.
NHBR: So what were most of the questions about?
SPENCE: How did you feel when you told the truth and other people didn't? What was it like testifying? Geez, there is nothing in your life that really prepares yourself to the fact that all of a sudden one day you have the FBI, the Postal Inspector, the SEC, the IRS, the Department of Justice - did I leave anybody out? - they are all after you.
We grow up thinking, if someone is questioned by the FBI, they must be a really bad person. As I have said before, I never knew anybody who went to prison and now I have [laughs] a whole new social network.
I tried to make them understand the consequences of bad decisions and what a bad decision is. But also if you make a bad decision, be strong enough to stand up, tell the truth and be able to put it behind you. They wanted to know the prison experience. Was I ever afraid? Was I ever hurt? Was I ever threatened? What was the worst thing I ever saw? What did you feel like?
It's a system that makes you ... they want to stomp on you. They want to break you. They want to make you feel you are lower than low. I know, just because I was prisoner 03418049, that is not indicative of who I am. I wasn't going to let that define me.
I think that people really need to think twice about what they do in their job and what they are asked to do. Is this a moral discussion or is this an ethical discussion? Your morals are based on what you grew up with and what your parents taught you. Ethics are the guidelines that you operate by. Where do morals leave off and ethics pick up? I am not sure there is a definition, but I know I was brought up better than the judgment I used. For that, it's a lifetime lesson learned.
So on to the next chapter? [Laughs] What do I want to do next? I have been approached by a gentleman to go on a speaking circuit. He would like for me to tell my story.
NHBR: In terms of business ethics?
SPENCE: Yes. I'm also going to school. I'm a full-time student as well as a full-time employee and caretaker.
NHBR: What are you going to school for?
SPENCE: Guess what? Business management. [Laughs.] I'm going to learn what GAAP is really all about! The class that I am taking now is about business ethics. Sure could have used this a few years ago.
NHBR: So where you going?
SPENCE: University of Phoenix.
NHBR: The Internet?
SPENCE: Actually right now I'm taking classes on the ground in the Burlington [Mass.] campus, and then I'm going to switch in December to online because it's late -- it's 6 to 10 p.m., and with my mom it makes for a long day.
NHBR: How old is your mom?
SPENCE: She'll be 91 in February. My mom is amazing. She promised to wait for me to come home, and as soon as I came home full time the 27th of July, she was here the next day. She told me it was going to be OK and she was not mad at me, and not embarrassed. She knew I had better judgment than that. She came to visit me while I was away.
I also did spend some time at the Strafford County House of Corrections. They brought me back, thinking that Jerry Shanahan was going to go on trial. I was at Strafford for four months.
NHBR: Four months? What was Strafford County like?
SPENCE: I was in general population. Oh my gosh. We don't see it. It's not in your face. People hanging out on street corners. You don't see drugs in your face here. It's here. There is a lot. Almost everyone in Strafford County was some kind of habitual offender. Drugs. Let me tell you, it's a revolving door.
I met some really nice people along the way. I met some wonderful people. People whose story would warm your heart or make you cry, but that place doesn't do anything to help anybody. The thing is that when you come home from prison you have to get a job. People who have been incarcerated for a long time, Bob, they don't how to get a job. They don't know what to do. When I was in Danbury, I did resumes for all of the girls that were going to be leaving to go home. I prepared their resume for them. I did cover letters of introduction.
The head of education conducted a seminar for some of the ladies who are getting ready to leave to prepare them for interview skills, and that was really very rewarding. The head of education calls me to let me know that one of my girls passed the GED, and by law I'm not supposed to have contact with them until we are both out of the system. I hope that one day my path will cross with some of these ladies again.
It's the people you meet along the way that keep you going, not any services from the system. That's my story. I do want to write a book, my whole journey and interject some funny stories along the way. There is so much to say, so many lessons to share.
Read NHBR's featured article on Gayle Spence