CONCORD, N.H. (AP) – The first of three former top executives of Enterasys Networks Inc. pleaded not guilty Thursday to federal charges of conspiring to inflate the company’s revenue at a cost of $1.3 billion to investors.

Robert Gagalis, 49, of Rye, surrendered to U.S. marshals in and appeared in federal court wearing a suit and ankle cuffs. He answered firmly “not guilty” as Magistrate James Muirhead read the five charges of securities, wire and mail fraud.

If convicted, Gagalis faces 75 years in prison.

Cathy Green, Gagalis’ lawyer, said he “absolutely, vehemently denies any wrongdoing. He looks forward to a trial when he will be exonerated.”

A trial was set for July 20, and Morse said it is possible the three former company officials will be tried together.

Muirhead later granted prosecutors’ request for $500,000 unsecured bail, and Gagalis was freed.

Also indicted were former vice presidents Bruce Kay, 53, of Yarmouth, Maine, and Gayle Spence, 45, of Newfields. They are charged with conspiracy, securities fraud and wire fraud. The two were scheduled for arraignment Thursday afternoon.

Kay also had emphatically denied any wrongdoing; Spence’s lawyer did not return a phone call seeking comment Wednesday.

Prosecutors said a fourth former executive, Gary Workman, 57, of San Ramon, Calif., pleaded guilty to one count of wire fraud and will be sentenced in September. Workman was president of Enterasys’ Asia-Pacific sales division.

First Assistant U.S. Attorney Peter Papps said the defendants conspired to inflate reported revenue in order to bolster the value of Enterasys stock and to further their careers.

Assistant U.S. Attorney William Morse said the alleged offenses caused Enterasys stock to drop $10.80 “overnight,” costing investors $1.3 billion.

Gov. Craig Benson, an Enterasys director at the time of the alleged conspiracy, is not named in the indictment against the three. Morse declined to say if Benson was mentioned in the investigation, citing company policy.

The Andover, Mass., company was based in Rochester, N.H., at the time of the alleged scheme. The computer networking company is the main successor to Cabletron Systems Inc., which Benson co-founded in 1983.

In October, Enterasys agreed to a $50 million settlement with investors who had accused top executives, including Gagalis, of regularly orchestrating phony deals and accounting tricks to inflate revenues.

AP-ES-05-20-04 1317EDT