Take-Two Ex-Chief Sentenced to 5 Years of Probation (Update4)

Aug. 1 (Bloomberg) -- Former Take-Two Interactive Software Inc. Chief Executive Officer Ryan Brant, the first CEO convicted of stock-option backdating, was sentenced to five years of probation after cooperating with prosecutors.

Brant, 35, pleaded guilty in February to falsifying business records. As part of a plea agreement with Manhattan District Attorney Robert Morgenthau, he avoided prison time by cooperating with an investigation of illegal backdating at the company, the maker of ``Grand Theft Auto'' video games.

``This is a good reminder in an atmosphere where corporate heads are being sent to lengthy prison terms that, if you cooperate and you own up, you will be rewarded for your efforts,'' said former prosecutor Thomas Curran, a white collar defense lawyer at Ganfer & Shore in New York.

More than 200 companies have disclosed internal or federal probes into whether they inflated the value of options awarded to executives by backdating or timing the grants to coincide with days when their stock price was low.

A jury in San Francisco began deliberating a federal stock-options case against former Brocade Communications Systems Inc. CEO Gregory Reyes this week. Reyes is the first executive to face a jury in a backdating trial.

``I'm deeply sorry for my role as an executive in the company and my role in the options dating process,'' Brant told New York State Supreme Court Justice Brenda Soloff today in a Manhattan courtroom. Brant had faced up to four years in prison.

First of Three

Brant was the first of three officials convicted at the New York-based company. Former General Counsel Kenneth Selterman and ex-Chief Accounting Officer Patti Tay also pleaded guilty earlier this year to falsifying business records.

Tay, 31, admitted she made false entries on a spreadsheet of 2001 and 2002 stock-option grants, according to court records. Selterman, 52, pleaded guilty to providing false information in a 2002 letter to regulators.

Brant's plea agreement also called for him to pay $6.3 million to settle a civil suit filed by federal regulators the day he pleaded guilty and another $1 million to New York City and state officials.

Brant attorney Lawrence Iason said his client had paid $4.7 million of the $7.3 million. Soloff said the probation sentence was contingent on Brant's paying the remainder by Oct. 15.

Assistant District Attorney Marc Scholl said the former executive had met the conditions of the cooperation agreement other than making the full $7.3 million payment. He said prosecutors agreed with the October extension of time to pay.

Iason declined to say if Brant had helped obtain the convictions of Tay and Selterman, saying only that he had cooperated with the District Attorney.

Plea Agreement Details

Brant's agreement bars him from holding any ``control management positions'' in public companies, including director or officer. Brant founded Take-Two in 1993 at age 21. He left as CEO in 2001. From 1993 to 2004, he was Take Two's chairman. In a regulatory filing in January, Take-Two said it had allowed Brant to ``control and dominate'' improper options backdating, starting when the company went public in 1997.

In a 2005 complaint, the U.S. Securities and Exchange Commission claimed Brant, former Take-Two Chief Financial Officers Larry Muller and James David Jr., and Robert Blau, head of sales, inflated revenue in fiscal years 2000 and 2001.

The company restated results back to 1998 and paid a $7.5 million fine. Brant paid more than $3.5 million to resolve the investigation of what the SEC called a ``massive financial fraud.''

Brant is a graduate of the Wharton School of the University of Pennsylvania, according to regulatory filings. His father is Peter Brant, the owner of Interview, Art in America and other magazines and co-founder of the Greenwich Polo Club, according to an August 2005, Fortune magazine article. His stepmother is supermodel Stephanie Seymour, Fortune said.

The case is People of the state of New York v. Brant, No. 644 of 2007, New York State Supreme Court (Manhattan).

To contact the reporter on this story: Karen Freifeld in New York State Supreme Court in Manhattan at kfreifeld@bloomberg.net.

To contact the editor responsible for this story: Patrick Oster at poster@bloomberg.net and; Jennifer Sondag at jsondag@bloomberg.net.