NEW YORK -- Carole D. Argo, a former chief financial officer at Belcamp-based SafeNet Inc., was sentenced to six months in prison yesterday by a Manhattan federal court judge for her role in manipulating the company's stock-option awards.
She pleaded guilty in October to one count of securities fraud for falsifying the Harford County company's financial reports, in an effort to earn Argo, her boss and some of her other colleagues awards and bonuses worth millions. Prosecutors say she illegally backdated stock options without recording the necessary compensation charges.
The 46-year-old mother of three was the fourth executive from a U.S. company this year to receive a felony sentence for the options crime. She is the third to receive jail time. Argo, who lives in Baltimore, also was ordered to pay a $1 million fine.
"I've spent my entire life trying to be a person of good character, and that's why I'm so sorry that my actions have caused harm," Argo told the court, her voice breaking for a moment as she claimed responsibility for the stock option plan. "I've learned from this, I truly have."
Federal guidelines recommended a sentence of eight to 10 years, but U.S. District Court Judge Jed S. Rakoff said that would be unreasonable.
Rakoff noted that Argo is a frequent volunteer for charitable causes and cares for her own children, along with the family of her widowed sister and a close friend.
"Miss Argo is the sort of person who most people would rightly admire ... but she was willing, when push came to shove, to break the law," Rakoff said, explaining his decision to Argo's many supporters in the courtroom, which included SafeNet's president and its general counsel.
"This is a serious crime, but it's not an Enron, it's not a WorldCom, it's not anything like that," the judge said.
The six-year scheme, which began in 2000, caused SafeNet to overreport its earnings by nearly $14 million and may have led some shareholders to lose money when the stock price dropped after the fraud was disclosed, according to the prosecution.
Argo will spend Easter with her family March 23, then report to prison two days later. The judge recommended she be incarcerated at a minimum-security women's facility in West Virginia.
Hundreds of investigations at companies across the country have led to criminal charges against at least 30 executives for the illegal "backdating" of stock options. The practice allows recipients to buy company stock at a price based on dates in the past when the share price was especially low.
