Judge dismisses guilty plea by Broadcom co-founder Henry Samueli

Judge dismisses Broadcom co-founder’s guilty plea

SANTA ANA, Calif. — A federal judge on Wednesday threw out a guilty plea by Broadcom co-founder Henry Samueli and dismissed a charge that the billionaire lied to investigators in a stock options backdating probe.

U.S. District Judge Cormac J. Carney made the announcement after Samueli, owner of the NHL’s Anaheim Ducks, spent two days testifying for the defense in the fraud trial of a former executive for the telecommunications chip maker.

“You have restored my faith in the criminal justice system,” an exhilarated Samueli told the judge in federal court in Santa Ana. “And I must be honest, that faith was shaken in the early days of this whole process.”

Samueli had pleaded guilty to making a material false statement to Securities and Exchange Commission investigators under a plea deal with federal prosecutors as part of a larger criminal probe into backdating at Broadcom.

The Irvine-based company was ultimately forced to write down $2.2 billion in profits in 2007 after stock options backdating was uncovered.

Carney’s decision came after Samueli testified in the trial of former Broadcom Chief Financial Officer William J. Ruehle, who is accused of conspiracy and securities fraud in the backdating probe along with former Broadcom co-founder Henry T. Nicholas III. Nicholas also faces drug-related charges. Both have pleaded not guilty.

Samueli, who was granted immunity to testify, told the court he lied to SEC investigators when he told them he wasn’t involved in awarding stock options at Broadcom. He also said he entered the guilty plea under pressure, hoping to avoid a massive indictment.

“I have listened to your testimony and I can envision that this is actually a very truthful response,” Carney said. “You are not going to be prosecuted for anything dealing with your SEC testimony.”

He added that Samueli’s record would be expunged.

Samueli had previously reached a plea deal with federal prosecutors to pay $12 million and get probation instead of prison, but Carney rejected the agreement as too lenient. He had planned to sentence Samueli after the trials for Ruehle and Nicholas.

Thom Mrozek, a spokesman for the U.S. attorney’s office, declined to comment on Carney’s decision.

Samueli’s attorney Gordon Greenberg said he believes the judge left his client clear from any charges related to the criminal backdating probe at Broadcom.

Samueli’s legal team had asked Carney to dismiss the case against Samueli due to prosecutor misconduct, including allegations that a federal prosecutor leaked private grand jury information to the media.

Broadcom president Scott McGregor said he was grateful for the judge’s decision on behalf of Samueli, a well-known philanthropist in Southern California who has donated millions to engineering and medical schools and the arts.

Samueli and Nicholas founded Broadcom in 1991. Samueli stepped down as chairman of the company’s board of directors and took a leave of absence last year after the SEC filed a civil complaint over backdating.

Backdating involves retroactively setting a stock option’s exercise price to a low point in the stock’s value, boosting the profits that are attained when the shares are sold. It is legal when properly accounted for, but if companies fail to properly disclose the move, profits can be overstated and taxes underpaid.

Ruehle’s trial continues Thursday and could include testimony from federal prosecutor Andrew Stolper. Stolper acknowledged Wednesday that he leaked information about the Broadcom case to the media.