Enterasys trial delayed again
The trial of five former Enterasys Networks executives on charges of securities fraud has been postponed once again, this time until Nov. 7.
New Hampshire U.S. District Court Judge Paul Barbadoro ordered the delay April 20 because of a scheduling conflict on the part of the attorney representing Robert J. Gagalis, former CEO of the company.
The trial was originally scheduled to begin March 7, but it was postponed to June because federal prosecutors had allegedly pressured Enterasys to resist paying the defendants’ attorney fees, even though the company was required to do so.
That controversial directive has been an issue at other corporate fraud trials around the nation, according to recent articles in The New York Times and The Wall Street Journal.
The defendants claim that their constitutional rights have been violated and are seeking to dismiss the case, a remedy that Barbadoro previously said was unlikely. Instead, the judge seemed inclined to delay the trial to give attorneys more time to prepare. Legal briefs on the matter of additional relief are still being filed, however.
In March, Enterasys agreed to pay the fees, but the June 5 trial date – for a case that is expected to last at least two weeks – conflicted with a June 19 U.S. Securities and Exchange Commission enforcement action that James Rehnquist – Gagalis’ Boston-based attorney — was expected to attend. Rehnquist said he couldn’t prepare for both cases at the same time.
The prosecution objected, noting that Rehnquist is a member of a 650-attorney firm, and that someone might be free to represent Gagalis. But Barbadoro said that they shouldn’t have to drop everything to work on this case, and besides Gagalis shouldn’t be deprived of the counsel of his choice.
Prosecutors are charging that executives conspired to mislead investors about the company’s revenues in 2001, shortly after it was being spun off from the former Cabletron Systems, the Rochester-based company that once was the state’s largest employer.
Four other executives have already pleaded guilty to similar charges, including former CEO Enrique “Henry” Fiallo.
Enterasys has since moved its headquarters from New Hampshire to Andover, Mass. In March, it was acquired by a group of private investors.