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Cooley team successfully defends Peregrine auditor again

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San Diego attorney Mike Attanasio is optimistic he won't have to defend his client, a former outside auditor for Peregrine Systems Inc., for a third time.

Attanasio led a legal team from Cooley Godward Kronish LLP that successfully defended Daniel F. Stulac for the second time against allegations that he and others directly conspired with Peregrine's management to manipulate earnings and deceive investors.

Cooley's litigation team also included San Diego attorneys Aaron Arnzen, Trent Packer, Samantha Everett and Joe Leventhal.

A federal judge declared a mistrial Thursday after a 12-member jury deadlocked on all four charges against Stulac, with six jurors voting "not guilty." Stulac, a former partner with the accounting firmArthur Andersen LLP, faced a maximum of 30 years in prison if convicted.

The jury also deadlocked in the case against Patrick Towle, a former revenue-accounting manager at Peregrine.

"Some of the jurors thought the defendants didn't know what was going on and others thought that they should have known because they were CPAs and all that," jury foreman Jimmy Staton said after jurors were dismissed.

U.S. District Judge Thomas Whelan scheduled an April 3 conference to discuss whether there would be a third trial.

Last August, a separate jury failed to convict Stulac following a three-month trial with eight members casting not-guilty votes.

"Fourteen people have said 'not guilty' in two trials," Attanasio said. "I've been doing this almost 20 years, and I've never heard of a third trial under those circumstances."

Stulac 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 Peregrine's financial reporting.

Peregrine, a San Diego-based software company once valued at $4.72 billion, filed for bankruptcy in 2002, after it announced 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.

Prosecutors charged 18 people in the fraud, and 12 pleaded guilty.

"I think (federal officials are) very zealous -- some might say overzealous -- in their attempt to cast the net as widely as possible in any Enron-style financial fraud case," Attanasio said. "In this case, they wanted to prosecute a gate-keeper, an outside auditor."

In the most recent trial, the Cooley team presented evidence that 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 Stulac directly colluded with management, participated in a cover-up, and in doing so, lied to his own audit team and partners.

"It was critical we not be sucked into the general sense of wrongdoing at Peregrine, but rather keep him separate from those wrongdoers," Attanasio said. "We did that partially by showing that part of the conspiracy was to deceive the auditors and that separated him and his team.

"To some extend he was there at the wrong time and, along with many others at Arthur Anderson, was duped by very persuasive liars at Peregrine."

Bloomberg News contributed to this report.

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