Human Capital & Careers

Ex-SafeNet CFO Gets Six Months

Carole Argo had faced a maximum penalty of 20 years in prison and a $5 million fine for her role in a stock-option backdating scheme.
Stephen TaubJanuary 28, 2008

Carole Argo, the former CFO of SafeNet was sentenced to six months in prison and ordered to pay a $1 million fine in connection with her role in a scheme involving the backdating of employee stock option grants.

Argo, who left her most recent post as president and chief operating officer of the Belcamp, Md.-based information-security company in October 2006, had pled guilty to one count of securities fraud on October 5. She had faced a maximum penalty of 20 years in prison and a $5 million fine.

Argo had been the senior vice president and CFO of the information security company from mid-1999 through June 2004 and acting CFO during a few months in 2006.

Between 2000 and 2006, Argo and others engaged in a scheme to backdate stock-option grants and omit to adequately report the compensation expenses related to the grants, according to the government’s indictment.

When she pleaded guilty, Argo admitted to signing off on regulatory filings that included inaccurate compensation expenses for those backdated option grants. The indictment against her was based on eight occasions when she and her coworkers allegedly backdated options grants “to reap substantial benefits.”

Michael Garcia, a U.S. attorney for the Southern District of New York, charged that SafeNet didn’t properly record or report a compensation expense for six of those grants, and accounted two of them only after SafeNet’s external auditors and internal accountants discovered the backdating.

When Argo and chairman and chief executive officer Anthony Caputo resigned in October 2006 amid an ongoing review of the company’s stock-options-granting practices, Walter Straub, an independent director who was later named chairman and interim CEO, went out of his way to praise the pair.

“On behalf of the board, I wish to thank Tony and Carole for their many contributions to SafeNet,” he said. Argo played an important role in leading the company’s day-to-day global operations and its growth strategy during her seven-year tenure, Straub added.