Broadcom judge throws out case against Nicholas, Ruehle
Personal Injury News
Article Date: 12/15/2009 | Resource: MLG
Broadcom judge throws out case against Nicholas, Ruehle
A federal judge today dismissed securities fraud charges against the two remaining Broadcom Corp. defendants, ruling that a prosecutor committed misconduct by improperly attempting to intimidate defendants and witnesses.
U.S. District Judge Cormac J. Carney acquitted Broadcom’s former chief financial officer, William Ruehle, and dismissed charges against Henry T. Nicholas III, the company’s co-founder.
The ruling follows Carney’s decision last week to toss out a guilty plea and criminal charges against Henry T. Samueli, Broadcom’s other co-founder.
The judge said prosecutorial misconduct compromised the integrity of the case.
“I have a solemn obligation to hold the government to the Constitution,” Carney said. “I am doing nothing more and nothing less.”
Ruehle and Nicholas had been charged with participating in a conspiracy to inflate Broadcom’s earnings by failing to report the backdating of stock options granted to employees. Samueli had admitted lying to the Securities and Exchange Commission.
“Mr, Ruehle, you are a free man,” Carney said.
Carney set a Feb. 2 hearing on separate drug-distribution charges against Nicholas.
After the hearing, Samueli walked over to Nicholas and said “Nick, give me a hug.”
The two men stood in the courtroom aisle and hugged each other for about a minute with tears in their eyes. “Oh my God, oh my God,” Nicholas said.
The hearing, which began at 9:00 a.m., adjourned shortly after 9:30 a.m.
Broadcom, which was founded in 1991, attracted employees by offering generous stock options — the right to purchase a share of stock in the company at a fixed price while paying them lower salaries.
Backdating — which means recording the granting and date of an option retrospectively is not illegal but must be reported to regulators and shareholders.
Ruehle had been on trial since October. The jury in his case was due to hear closing arguments on Thursday. Instead, jurors will be called and told they are no longer needed.
“After all this time with being a defendant and being accused it hasn’t sunk in yet,” Ruehle said afterward. “I need some time to absorb it all.”
The conduct of federal prosecutor Andrew Stolper has become the recent focus of Ruehle’s trial. Carney gave Broadcom’s general counsel David Dull an alleged unindicted co-conspirator full immunity from prosecution after determining Stolper committed misconduct when talking with Dull’s attorneys.
He also found fault with Stolper for leaking to a Los Angeles reporter in 2007 that Samueli failed to cooperate with federal investigators. Such leaks are against the policy of the U.S. Attorney’s Office.
Nicholas had been scheduled to be tried on securities fraud charges next year.
Samueli called Carney’s ruling “the ultimate vindication” for himself, Ruehle, Nicholas and the company, which he said had been “smeared and hurt” by the case.
“I can’t talk right now,” Nicholas said
For more information regarding this article please contact:
Jeffrey Marquart
(949)589-0150
jmarquart@marquartlawgroup.com