Enterasys judge nixes prosecution’s passport plea

As the jury in the Enterasys Networks securities fraud case deliberated for the fourth day without reaching a verdict, the presiding judge Thursday denied the prosecution’s motion to confiscate the passport of one of the five defendants.

The prosecution said it is concerned that Jerry Shanahan, the former chief operating officer of Enterasys and a 42-year-old Irish national facing penalties of more than 45 years in prison — might be tempted to leave the country if convicted.

But Shanahan maintained that that he was facing a stiff sentence ever since he was charged, yet he waived extradition, and sat through every day of the month-long trial. He also noted that his wife and his young children were in New Hampshire during the trial. His wife would often watch the trial along with friends and family from Ireland, while the kids stayed behind in a local hotel room.

The case has created a bit of a stir in Ireland, with the media there questioning the long arm of the Securities and Exchange Commission and federal prosecutors.

In his ruling, U.S. District Court Judge Paul Barbadoro sided with Shanahan, saying that such a step wasn’t needed.

Shanahan, who once ran Cabletron Systems’ operations in Ireland, moved to New Hampshire in 2000 to take over as Enterasys’ COO in 2001, when Cabletron spun off Enterasys. The government accused Shanahan of conspiring with four other defendants to inflate revenue during that spin off. He moved back to Ireland in 2002, after the accounting scandal broke.

Also charged are: Robert Gagalis, 49, of Rye, former chief financial officer; Bruce Kay, 53, of Yarmouth, Maine, former vice president of finance; Robert Barber, 53, of Durham, a former Cabletron official who was part the investment team; and David Boey, 51, of Atlanta, who headed Enterasys’s Asia Pacific Division. – BOB SANDERS