Judge Hangs Fire on Reyes Case

5:45 PM -- High-profile corporate fraud trials may be relatively common, although events taking place at a San Francisco courthouse over the coming weeks could send shockwaves through the country's legal sector. (See 2006 Storage Winners & Losers and Ebbers Sentenced: See You in 2030.)

The fate of former Brocade CEO Greg Reyes, who is accused of stock option backdating, looks set to be resolved by a jury, after a U.S. District Court judge yesterday withheld his decision to rule on a defense motion to dismiss the case. (See Reyes Charged With Fraud and Reflections on Reyes.)

The defense filed the motion for acquittal earlier this month, claiming a lack of prosecution evidence against Reyes. There has been some speculation that the government lacks a water-tight case against Reyes, although, by withholding his decision, Judge Breyer may have set a precedent for other corporate fraud trials. (See Feds Made Mistake.)

"You have people with no interest in Brocade, or Reyes, or technology, watching this," says StorageIO Group analyst Greg Schulz. "This is a precedent-setting case."

With the government hell-bent on stamping out backdating fraud, other prosecutors and defense attorneys across the U.S. will be paying extremely close attention to events in San Francisco.How will a jury cut through the Gordian knot of evidence associated with this type of trial? Will Judge Breyer finally rule on the defense motion? Will Reyes eventually be acquitted?

For Greg Reyes, the next few days are likely to be the most anxious of his life, but they could also serve as a template for future corporate fraud cases.

James Rogers, Senior Editor Byte and Switch