Kevin Ryan stepped down today as U.S. Attorney for the Northern District of California. That could potentially be relevant to Apple, because Ryan has led the government's effort to prosecute Silicon Valley companies on options-related transgressions, such as backdating. Last July, Ryan brought the first backdating indictment, against two former Brocade Communications executives. Just around that time, he also created a backdating task force . And sources say it is his office that is scrutinizing Apple's books, as well.
A spokesman for Ryan, Luke Macaulay, says Ryan has been thinking about leaving since last summer, in part because he’s got two sons heading for college. In other words, maybe he felt it was time to give up public service for a while, and head for the more lucrative private sector. But there’s also been much talk about an exodus of veteran prosecutors and others during his tenure, and criticism of his management style (check out this piece from a while back in SF Weekly). Sources tell me that Ryan, as the SF Weekly story suggests, got plenty of negative feedback in an internal review earlier this year.
And in October, DOJ headquarters in Washington sent out a panel of prosecutors from around the country to interview a dozen or so of those that had jumped ship during Ryan’s tenure. My sources say such an inquiry of former staffers is rare, and maybe unprecedented. Macaulay confirms this external review occurred, but isn’t sure how common it is. Also, he said no final report has come out of it so “it’s too early to draw any conclusions from the evaluation.” Still, given that Ryan’s departure was a “mutually agreeable decision with Washington,” according to Macaulay, Ryan’s higher-ups were evidently concerned about something.
So what does Ryan’s departure mean for Apple? That depends on whether his replacement pursues backdating cases as aggressively as he has. As it is, Macaulay points out that Ryan has publicly said it is unlikely his office would indict more than five companies (the math is complicated: Ryan has said his office is most intently examining red flags at ten to twenty percent of twenty five of the companies now being investigated. That’s 2.5 to 5, to be exact).
That’s not a gigantic caseload, but some former government prosecutors and defense attorneys I’ve spoken with wouldn’t be surprised if it fell even more. Ryan, as the guy in charge when the backdating emerged as a full-blown scandal earlier this year, might be more invested in seeing it through than his successor might be. Even now, says one source, “the steam seems to have come out of [the DOJ’s prosecution of backdating cases) a bit.
That’s not to say the folks at Apple should be sleeping any easier. No doubt, a decision to charge Apple would create a steam whistle heard round the world, in no time flat. Still, my guess is that Ryan’s departure means the odds of criminal charges against Apple or Steve Jobs got a bit longer today.