updated 11:15 am EDT, Mon April 23, 2007
Jobs to avoid charges
Apple boss Steve Jobs -- who is considered the company's backbone and driving force -- is likely to avoid criminal charges in the federal investigation of illegal stock options backdating, according to one report. A Mercury News examination of the backdated 2001 stock-options grant to Jobs, which was achieved via falsified documentation, is the focus of the federal investigation but reveals little evidence that points to criminal charges against the executive. The investigation has so far revealed no evidence that Jobs directed the illegal backdating of his own grant or worked to cover it up, according to lawyers familiar with the grant who asked to remain anonymous. As a result, federal prosecutors lack the type of egregious misconduct necessary to incriminate Jobs in the ongoing investigation, according to the report.
A close review of the events which led to the grant in question revealed that the backdating was likely a clumsy attempt by Apple's board to reward Jobs for bringing the company back to its feet.
"When you start thinking about lying, cheating and stealing, there's a mental state that you know what you're doing is wrong," said former San Francisco-based federal prosecutor Jeffrey Bornstein, who is not involved in the Apple case. "If you don't appreciate that, it's very difficult for the government to show that you're a criminal."
Prosecutors face a difficult road if they are to base a securities fraud case against Apple's CEO on the backdating of his own grant, primarily because that grant was approved by Apple's board, not Jobs, legal experts who are familiar with the grant say.
"Jobs can take the defense, 'What do I know about the proper accounting for this transaction? I didn't keep a secret from anybody and assumed the accounting would be proper,'" said Stanford law professor and former SEC commissioner Joseph Grundfest. "That would seem to distinguish the Apple situation."