McAfee Inc.’s former general counsel was indicted for fraudulently backdating stock option grants in 2000 and 2002. Kent Roberts was charged in a seven count criminal indictment with devising a scheme to defraud by granting himself and others valuable in-the-money stock options. The charge also alleged that Roberts hid the true nature and value of the stock option grants from Network Associates—McAfee’s predecessor company—its board, shareholders, auditors, the public, and the Securities and Exchange Commission, according to an announcement from the U.S. Attorney’s Office for the Northern District of California.

Specifically, Roberts was charged with two counts of mail fraud, one count of wire fraud, three counts of making false SEC filings, and one count of falsifying books, records, and accounts of the computer-security firm. Roberts faces 20 years in prison and a fine of $ 250,000 for each count of mail and wire fraud; 20 years in prison and a fine of $5 million for each count of making false SEC Filings; and 20 years in prison and a fine of $5 million for the count of falsifying records.

“It is integral to the public trust in our financial markets that transactions affecting a company’s financials are recorded honestly, particularly by those who are responsible for regulatory compliance,” said U.S. Attorney Scott N. Schools, in a statement. The indictment states that beginning in 2000, Roberts fraudulently granted himself extra compensation by causing the grant date for his stock options to be changed so that the exercise price of the grant would be lower, and so that it would appear that the grant was made on the new fabricated date.

According to the indictment, Network Associates’ board granted Roberts the option to buy 20,000 shares of stock at the strike price of $29.62, the closing price on February 14, 2000. In late 2000, Roberts was concerned that the grant was “underwater,” noted the indictment. He is accused of instructing Network Associates’ then-controller to change the grant date and exercise price in the computer system, to April 14, 2000, with a new exercise price of $19.75.

The indictment also charges that Roberts concealed and failed to disclose the change that he ordered to his February 2000 stock option grant. More interesting, he is charged with having the impudence to launch a probe into the controller’s actions related to the changes to the options grants. As a result of the investigation, Network Associates’ management acted on Roberts’ recommendation to remove the controller from his position in the finance department.

The indictment then noted that in April 2002, Roberts participated in a conference call with the SEC during which he described the former controller’s conduct with respect to stock options, the decision to remove the controller from his position, and the compensation expense that Network Associates would take for the stock options that the controller re-priced.

“Although Roberts led the investigation into the then-controller’s conduct relating to stock options, and reported that conduct to the SEC, he concealed and failed to disclose … that the same then-controller had changed the exercise price and grant date of Roberts’ February 2000 grant,” the government stated. Roberts was also charged with making a false entry to board meeting minutes related to grant dates for a options awarded to the former CEO and chairman of Network Associates. The grant date for the one-time CEO was made when the closing price of Network Associates’ stock was relatively low, yet the indictment notes that the board did not intend to make the grant effective on that date.

Roberts joined Network Associates in May 1998 and became the general counsel and secretary of the company in 2001. Roberts was also Network Associates’ corporate compliance officer regarding SEC reporting rules, and in 2002 became one of the three founding members of the Ethics First Committee, which was charged with investigating any fraudulent conduct reported by employees. In May 2006, Network Associates’ finance department discovered the fraudulent change to Roberts’ February 2000 promotion grant and Roberts was fired effective May 30, 2006.