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12/20/2006
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Former Enterasys Executives Convicted In New Hampshire

The jury on Tuesday convicted former chief financial officer Robert Gagalis and three others on charges that they illegally inflated Enterasys revenue in 2001.

Prosecutors scored another victory over executives who played illegal financial games during the technology bubble when a federal jury convicted four former executives of telecom equipment provider Enterasys of securities fraud and conspiracy charges.

The jury on Tuesday convicted former chief financial officer Robert Gagalis and three others on charges that they illegally inflated Enterasys revenue in 2001. Also convicted were Bruce Kay, a former VP; Robert Barber, a former accountant; and David Boey, a former executive in the firm's Singapore office.

But the jury acquitted the firm's former chief operating officer Jerry Shanahan of one charge and failed to return a verdict on several other charges he was facing. Prosecutors are considering whether to seek a new trial against him.

Enterasys was the largest piece of the former Cabletron, a networking firm whose stock rocketed into the stratosphere before the company was broken up in the early 2000s.

Four other former Enterasys executives, including former chairman, president, and CEO Enrique Fiallo, had previously pleaded guilty to charges and testified in the jury trial, according to media reports.

Sentencing of all the executives is scheduled for March.

The company has a storied history, beginning in 1983 in a Massachusetts garage as Cabletron and eventually employing 6,000, most of them in New Hampshire.

Cabletron tracked the technology bubble, inflating in the late 1990s, but collapsing in the early 2000s. Cabletron was broken into different units, and Enterasys remained the largest operation. Enterasys later moved back to Massachusetts and the firm was taken private in March.

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