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Ex-Vitesse Executives’ Criminal Case Ends With Mistrial

The trial of two former Vitesse Semiconductor Corp. executives on charges of inflating earnings and backdating options ended in a mistrial after the jury deadlocked on a verdict.

Jurors told U.S. District Judge Paul Crotty in New York that they couldn’t reach a unanimous decision on any of seven criminal counts against Louis Tomasetta, the ex-chief executive officer of Vitesse, the Camarillo, California-based chipmaker, and former Executive Vice President Eugene Hovanec.

“We understand the seriousness and importance of this case, however, we do not see any way forward,” the jury wrote to the judge yesterday afternoon.

Crotty declared a mistrial today, on the fourth day of deliberations, after the jurors again told him they were unable to agree. The two men had faced as long as 20 years in prison if convicted of the most serious counts.

Ellen Davis, a spokeswoman for U.S. Attorney Preet Bharara in Manhattan, declined to comment on the outcome. Dan Marmalefsky, a lawyer for Tomasetta, and Gary Lincenberg, who represents Hovanec, didn’t immediately respond to voice-mail and e-mail messages seeking comment.

Tomasetta and Hovanec were fired in May 2006 in an internal probe of options backdating. The men created phony documents, including compensation committee minutes and a Palm Pilot entry, to show the options were approved at earlier meetings and weren’t backdated, prosecutors said.

Lawsuit Settlements

Vitesse agreed in 2007 to pay $8.75 million to settle shareholder suits related to the alleged accounting fraud and in 2010 settled claims by the U.S. Securities and Exchange Commission for $3 million.

Yatin Mody, Vitesse’s former chief financial officer, and its ex-director of accounting, Nicole Kaplan, pleaded guilty to securities fraud and other charges in 2010. They testified against Tomasetta and Hovanec in the trial.

In one note to the judge, jurors said they didn’t share the same understanding of how to apply his instructions on conspiracy or venue, which requires that particular criminal acts were committed in New York.

The case is U.S. v. Tomasetta, 10-cr-01205, U.S. District Court, Southern District of New York (Manhattan).

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