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Busted!: Former valley executive convicted |
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HE'S FOUND GUILTY OF FRAUD, CONSPIRACY
By Howard Mintz
Mercury News
A federal jury in San Francisco has convicted a former Silicon Valley chief executive of defrauding investors by cooking the books at his software company and improperly diverting millions of dollars to himself as auditors closed in on his financial shenanigans.
After a 10-week trial, a jury convicted Reza Mikailli, 52, of securities fraud and conspiracy Thursday in connection with a financial scandal at Unify, a software firm now based in Sacramento that previously also operated out of San Jose. Mikailli, a Saratoga resident, was president and CEO of Unify from 1995 to 2000, when allegations surfaced that he had vastly overstated the company's financial outlook to mislead investors.
Unify eventually had to restate earnings for 2000 and was delisted by Nasdaq.
Prosecutors told jurors that Mikailli secretly transferred hundreds of thousands of stock shares to his ex-wife as part of a divorce settlement, and later sold his remaining shares to pay his taxes. Overall, prosecutors alleged that Mikailli profited by more than $4 million while he was inflating the company's revenues.
``This case demonstrates that juries in San Francisco understand the significance of what it means for corporate officers to fraudulently manipulate the books and trade on inside information,'' U.S. Attorney Kevin Ryan said in a statement.
Unify's former Chief Financial Officer Gary Pado already pleaded guilty in connection with the case and is awaiting sentencing.
Mikailli is scheduled to be sentenced in February. He also faces a civil suit filed by the Securities and Exchange Commission.
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Staff Writer Chuck Carroll contributed to this report. Contact Howard Mintz at hmintz@mercurynews.com or (408) 286-0236.
Source: SiliconValley.com
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