SOURCE: Cooley Godward Kronish LLP

March 21, 2008 13:16 ET

Cooley Achieves Major White Collar Victory

SAN DIEGO, CA--(Marketwire - March 21, 2008) - Cooley Godward Kronish LLP achieved a major trial victory in San Diego federal court yesterday on behalf of client Daniel F. Stulac, one of the first outside auditors in the post-Enron era to go to trial against allegations of direct collusion with corrupt management. The jury announced yesterday that it was deadlocked following the six-week trial, with six jurors voting not guilty on all charges. Mr. Stulac faced a maximum of 30 years in prison if convicted.

Mr. Stulac, formerly a partner of the former Big 5 accounting firm Arthur Andersen LLP, was charged in October 2004 by the U.S. Attorney's Office in San Diego with securities fraud, wire fraud and bank fraud in connection with the financial reporting of Peregrine Systems, Inc. Peregrine was a San Diego-based software company that filed for bankruptcy in 2002 after it announced that it was conducting an internal investigation of possible misstatements in previous financial reports. The investigation resulted in the resignations of Peregrine's CEO and CFO. At the time of the indictment against Mr. Stulac and ten other defendants, the U.S. Attorney described the case as "the largest fraud in the history of the Southern District of California."

Cooley's team, led by San Diego-based partner Michael Attanasio, successfully defended Mr. Stulac against allegations that he and others directly conspired with Peregrine's management to manipulate earnings and deceive investors. With six jurors voting not guilty, the twelve-member jury declined to find that Mr. Stulac was involved in the alleged Peregrine conspiracy. The Cooley team presented overwhelming evidence that Mr. Stulac and his audit team were misled by Peregrine's management and were unaware of the fraud perpetrated by Peregrine's CEO, CFO, Controller and others. The jury rejected the Government's claims that Mr. Stulac directly colluded with management, participated in a cover-up, and in doing so, lied to his own audit team and partners.

Last August, following a three-month trial, a jury was deadlocked with eight votes favoring acquittal of Cooley's client Mr. Stulac on all counts. The U.S. Attorney determined to retry Mr. Stulac in a trial that began earlier this year and concluded with yesterday's mistrial.

"This win is symbolic because it sends a message to the Justice Department and the SEC that they cannot overreach in financial fraud cases in the post-Enron era," said Mr. Attanasio. "It is one thing to say that an auditor was associated with a company that was cooking its books; it is quite another to prove that he was knowingly involved in the fraud," Mr. Attanasio explained.

"The government fell far short of its burden on the latter claim and this chapter of the Peregrine case should now be put to bed," Mr. Attanasio said.

Between 2002 and 2004, the FBI and the United States Attorney for the Southern District of California conducted an investigation of Peregrine. Eleven former Peregrine officials and business partners have pled guilty to various charges, including securities fraud, wire fraud, bank fraud, conspiracy, falsifying books and records, and obstruction of justice. Mr. Stulac, along with former Peregrine executive Patrick Towle, are the only defendants to go through two trials without being found guilty of a single count.

Cooley's litigation team, led by Mr. Attanasio, included attorneys Aaron Arnzen, Trent Packer, Samantha Everett and Joe Leventhal.

About Cooley's Litigation Practice

Cooley's 300-lawyer litigation department represents many global businesses, particularly in the technology and life sciences sectors, in high-profile trials and major litigation matters in state and federal venues across the country. The Firm has one of the largest patent and IP litigation practices in the country. Cooley litigators also handle a wide range of white collar, regulatory and governmental enforcement matters, and have depth in securities litigation, antitrust, a wide range of consumer class actions, bankruptcy, tax controversy, employment and commercial litigation.

Last year The National Law Journal named Cooley's litigation department to its prestigious "Defense Hot List." This recognition validates the Firm's growing reputation as a "short list" choice of general counsel and boards of directors in the most important matters and disputes facing their companies.

About Cooley Godward Kronish LLP

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