NEW YORK -- A federal judge set a $500,000 bond yesterday for a former executive at a Maryland technology company who has been charged with manipulating stock option grants to allow top employees to lock in unlawful stock gains and exaggerated bonuses.
Flanked by two attorneys and watched by her husband in the courtroom gallery, Carole D. Argo, 46, a former chief financial officer, president and chief operating officer of SafeNet Inc. in Belcamp, in Harford County, entered a not guilty plea in U.S. District Court in Manhattan on charges of securities fraud and conspiracy.
If convicted, she faces a maximum of 25 years in prison and fines of at least $250,000.
The judge, Jed Rakoff, ordered government attorneys to hand over discovery material in the case - which may amount to 3 million pages of documents - to Argo's lawyers by Aug. 16.
Saying that all efforts should be made to avoid the "extraordinary, expensive, time-consuming delays" that often consume federal trials, the judge set the trial date for Dec. 3.
Prosecutor Joshua Goldberg estimated the trial could last up to a month.
As part of Argo's negotiated surrender and release, her attorneys also agreed to post a $25,000 cash security, hand over her passport and limit her travel to the continental United States, with a limited exception for a trip to Canada next month.
A spokeswoman for the U.S. attorney's office for the Southern District of New York, which is handling the prosecution, said no one else has been charged as part of the investigation. The indictment handed up yesterday repeatedly refers to known and unknown "co-conspirators" but does not name individuals.
After the hearing, Argo and her attorney, Paul Engelmayer, declined to comment.
Argo, who is listed as living in Baltimore, is at least the eighth U.S. executive to be criminally charged amid a widespread investigation into whether corporate officers manipulated the dates on which stock option awards took effect in order to make them as valuable as possible.
Stock options allow someone to buy a stock at a certain price at a future date. They are intended to be incentives that pay off if a company makes more profit and its stock price increases. They are supposed to be granted at the current stock price so employees benefit only if the stock price goes up.
At SafeNet, according to the indictment, Argo systematically changed actual award dates for stock options to coincide with dips in the company's stock price. The scheme, prosecutors allege in court papers, made the options instantly profitable.
Yesterday, Donna St. Germain, a company spokeswoman, said SafeNet officials had been cooperating with the federal prosecutors and the Securities and Exchange Commission for more than a year.
Argo resigned from the Belcamp encryption-technology company in October, along with chief executive Anthony A. Caputo. He has not been charged, though he is referenced in the indictment as a "former CEO" who benefited financially from the re-dating.
matthew.dolan@baltsun.com
