Government investigators have filed a criminal complaint against the former chief financial officer of software maker Mercury Interactive accusing her of tax evasion in connection with a stock options backdating scheme.The document filed this week in U.S. District Court by the Internal Revenue Service accuses Sharlene Abrams of concealing the amount of money she made from Mercury stock options and helping two former executives do the same on their tax returns. The complaint asks government prosecutors to file criminal charges against Abrams on three counts of filing a false tax return for herself and aiding in false returns being filed for former Mercury Chief Executive Amnon Landan and former Chief Operating Officer Kenneth Klein.



As of Friday night an indictment had not been filed and a spokesman for the U.S. Attorney's Office in San Francisco said no information about the case was available yet.

IRS spokeswoman Arlette Lee said the criminal tax-evasion case is the first of its kind in Northern California connected to stock options backdating.

Mercury was acquired by Hewlett-Packard Co. two years ago in a $4.9 billion deal designed to bolster the Palo Alto-based technology company's blossoming software business. Mercury makes software that helps companies test the performance of their applications, such as payroll and sales software.

A message left for an HP spokeswoman after-hours Friday was not immediately returned. A home phone number for Abrams and the name of her defense lawyer could not immediately be located.

Backdating is the practice of changing a company's stock options records to make it appear that those options were sold or granted on different dates than they actually were, usually to boost an employee's windfall. It's not illegal if it's properly recorded in the company's financial records.

Abrams is accused of tampering with Mercury's records to make it appear that she, Landan and Klein cashed out of stock options at lower prices than they actually did in 2001, thus making it appear they earned less during that year and didn't have to pay as much in taxes.

Abrams is already facing civil securities fraud charges along with Landan and two other former Mercury executives. Those charges were filed by the Securities and Exchange Commission in May 2007.

The alleged options abuses happened before HP bought Mercury.

Mercury was one of the first companies to reveal its financial records were faulty because of stock options tampering.

The company agreed in October to pay $117.5 million to settle a group of lawsuits accusing the business software maker of duping investors.

Mercury also had to wipe out more than $530 million in previously reported profits and agreed to pay $28 million to settle civil fraud charges brought by the SEC.

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