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The U.S. Securities and Exchange Commission has settled fraud claims against five former SafeNet employees, including a chief executive officer who resigned in 2006 amid a stock option scandal.

Former CEO Anthony A. Caputo and Chief Financial Officer Kenneth Mueller were charged in a civil complaint with backdating stock options to inflate their value between 2000 and 2006. They were also accused of manipulating earnings reports with the help of former accountants Clinton Greenman, John Wilroy and Gregory Pasko.

The men neither admitted nor denied involvement, though each agreed to return allegedly ill-gotten gains and pay penalties.

Caputo, who previously paid $1.5 million to settle the backdating claims, agreed to a $250,000 civil penalty, while Mueller agreed to pay $225,000 and was barred from being an officer or director of a public company for five years. Mueller and the accountants also had their rights to act as accountants before the SEC suspended. SafeNet agreed to a $1 million penalty.

Company spokeswoman Donna St. Germain said SafeNet has cooperated with investigators since inquiries were launched in 2006 and recently completed an audit of revised financial statements. That information was given to the government in January. The SEC's civil complaint was filed Nov. 10, and the settlement was announced two days later.

The backdating scheme launched a federal investigation into the once public company, which led to Caputo's resignation, along with that of Chief Operating Officer Carole Argo, who was also sentenced to six months in federal prison. SafeNet went private in 2007, shielding its accounting procedures and the stock option investigation from scrutiny.

An article in Saturday's business section incorrectly reported the amount of money former SafeNet Chief Financial Officer Kenneth Mueller agreed to pay to settle civil fraud claims by the U.S. Securities and Exchange Commission. He agreed to a $125,000 settlement figure.The Baltimore Sun regrets the errors.
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