Ex-Enterasys execs seek sentencing delay

The four convicted former Enterasys Networks executives asked US District Judge Paul Barbadoro on Wednesday to delay their sentencing by nearly a month.

The defendants — former CEO Robert Gagalis, Bruce Kay, former vice president of finance, Robert Barber, a member of the investment team, and David Boey, head of the Asia Pacific sales division — want the sentencing to occur held April 16-17, as opposed to March 21-22.

A jury convicted them in December of conspiring to inflate revenue in order to deceive regulators and investors when Enterasys was being spun off from the Rochester-based Cabletron Systems in 2001. Charges against a fifth defendant, Jerry Shanahan, were dismissed after the jury failed to reach a verdict. Federal prosecutors have yet to decide whether to retry him.

The defendants face up to 10 years in prison for each count of conspiracy. For some, this could mean a prison term of more than 40 years, but most observers expect the sentence to be far shorter than that.

Federal sentencing guidelines tie prison time to the amount of loss involved. Prosecutors have contended that shareholders lost more than $1 billion after the stock price plummeted after securities irregularities came to light. The stock never recovered, and private investors later bought Enterasys – which has since moved to Massachusetts — at a fraction of its stock price at the time of the spin-off.

The defendants plan to contest the prosecution’s estimate of the size of the loss as well as their share of the legal responsibility for it. In Wednesday’s motion they said the loss issue was a complex one and because of that they needed additional time to prepare for a hearing on the matter.

The requested delay would mean sentencing of the defendants would be scheduled closer to the sentencing of the former executives who had previously pleaded guilty to securities violations.

The court plans to sentence former CEO Henry Enrique Fiallo

on April 27. His assistant, Gayle Spence, former controller Anthony Hurley and Gary Workman, former president of the Asia Pacific division are all scheduled to be sentenced April 19. All four testified against their former colleagues. The prosecution’s sentencing recommendation is tied to their cooperation. – BOB SANDERS

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