Filing hints at Riverstone criminal probe

Prosecutors have investigated – and still could be investigating — criminal charges relating to the Cabletron Ssytems spinoff Riverstone Networks, according to three former officials of both companies in a filing relating to the Riverstone bankruptcy.

The officials, who include former Chief Executive Officer Romulus Pereira, said that, although there is no basis for such an investigation, they were “informed and believe that criminal authorities have investigated, or are investigating, matters related to Riverstone.”

The officials said they “face the possibility of criminal actions being brought against them or others with their work for Riverstone.”

The officials are asking RNI Wind Down Corp., the bankrupt shell of Riverstone, to contribute as much as $5.5 million for any legal costs of the officers.In addition to Pereira, the officers are Robert Stanton, Riverstone’s former CFO, and Suresh Gopalakrishnan, chief technology officer. All three were holdovers from Cabletron Systems, the Rochester firm that was once one of New Hampshire’s largest employers.

Cabletron, created both Riverstone and Enterasys Networks in 2001, but both companies were plagued by investigations by the Securities and Exchange Commission relating to accounting fraud during the period of and immediately following the spinoff.

While the officers previously acknowledge that they were targets of the SEC investigation, this was the first time they said they worried about criminal prosecution as well. – BOB SANDERS

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