Reyes

I. Introduction

Gregory Reyes and Stephanie Jensen appeal from their con- victions for falsifying corporate books and records, and related charges, stemming from their participation in a scheme to reward employees with grants of backdated stock options. The options were backdated to a time when the com- pany’s stock price was low, but the options were not recorded 11200 UNITED STATES v. REYES on the company’s books as an expense of the corporation, so the books showed the corporation to be more profitable than it was. The convictions represent the first criminal convictions for a backdating practice that was widespread in the late 1990s, particularly in the Silicon Valley, where the appel- lants’ company was located.

We reverse Reyes’ conviction because of prosecutorial misconduct in making a false assertion of material fact to the jury in closing argument. We affirm Jensen’s conviction but vacate the sentence and remand for resentencing because the sentence improperly included an obstruction of justice enhancement for which reprehensibility lay primarily with Jensen’s lawyer.

II. Facts and Procedural Background

Gregory Reyes was the Chief Executive Officer…