RNI equity committee claims former executive made misleading statements in deleted e-mail investigation

By Caroline Salls

Pittsburgh, Sept. 5 - RNI Wind Down Corp.'s official committee of equity security holders filed a report Friday with the U.S. Bankruptcy Court for the District of Delaware in connection with allegations that former executive Noah Mesel deleted e-mails from his computer and replaced his hard drive.

The committee said in the report that Mesel allegedly made many misleading statements and statements that do not appear credible in connection with his testimony over the deleted e-mails and replaced hard drive.

According to the report, Mesel supervised many complex lawsuits at RNI, formerly Riverstone Networks, Inc., including Riverstone's response to an extensive Securities and Exchange Commission investigation.

The committee said the company reached an agreement with the SEC in February that ended the pending investigation into Riverstone's affairs, but that Mesel was required to preserve the related documents.

According to the report, Mesel said he never saw a demand that all investigation-related documents, in hard copy and electronic form, be preserved.

In the report, the committee said Mesel was led to believe that he could delete some of the documents following a conversation with an attorney.

However, the attorney testified that he had only advised Mesel that nothing in the bankruptcy code kept him from discarding some hard copy files related to the SEC investigation after Mesel assured him that the documents were available from other sources.

The committee said Mesel's conversation with the attorney did not involve retention of electronic files.

Based on that conversation, the committee said Mesel began to delete electronic files, even though he allegedly knew further SEC enforcement action or claims were possible, he allegedly knew other material litigations were pending, several contested matters had arisen in the company's bankruptcy case and the sale of substantially all of the company's assets was delayed at significant cost to the estate.

In addition, the committee said Mesel replaced his malfunctioning hard drive during mediation over timing of the committee's investigation, and that he attempted to transfer files from the old hard drive to the new one.

Since then, the committee said, Mesel has contended that the new hard drive did not work, and that he had lost the hard drive.

However, the committee said its investigation failed to show whether a second hard drive ever existed.

RNI, a Santa Clara, Calif. provider of carrier ethernet routers, filed for bankruptcy on Feb. 7. Its Chapter 11 case number is 06-10110.

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