Henry Samueli, Anaheim Ducks Owner, to Plead Guilty in Broadcom Case

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Henry Samueli, Anaheim Ducks Owner, to Plead Guilty in Broadcom Case

For updated news on this story read part two of this story here.

With the Anaheim Ducks organization worrying about prospects, veterans considering retirement, and contract issues with players this offseason, owner Henry Samueli is worrying about the justice system.

Samueli co-founded Broadcom in 1991 with Henry T. Nicholas III, his former engineering student at UCLA. They each threw in $5,000 and worked out of Nicholas' Redondo Beach home, moving to Irvine four years later, and taking the firm public three years after the Irvine move.

The company boomed with microchips. It helped make Samueli one of the most influential and richest men in Southern California, which gave him the ability to buy the Anaheim Ducks in 2005 for $75 million. The franchise is worth substantially more after their Stanley Cup victory in 2007.

Samueli’s name adorns the engineering schools at UCI and UCLA, as well as a 500-seat performing arts theater in the county's arts district. His gifts reportedly top $200 million.

All this makes Samueli the biggest name to be ensnared in a national stock backdating scandal.

Today, the U.S. Attorney’s Office in Santa Ana said the Anaheim Ducks owner and co-founder of Broadcom has agreed to plead guilty to lying to federal authorities regarding his role in the backdating of stock options for Broadcom Corp.

The powerful billionaire, one of Southern California’s most prominent philanthropists, is expected to enter his plea this afternoon to a single felony count. Under his agreement with federal prosecuters, Samueli will be placed on probation for five years and be forced to pay $12.2 million in penalties, Assistant U.S. Atty. Robb C. Adkins told the Los Angeles Times.

Samueli is getting off much easier than other Broadcom executives. Fellow co-founder Henry T. Nicholas III has been indicted on 24 felony counts of misdating stock options to make them more valuable to employees, of distributing drugs to associates, and spiking the drinks of certain Broadcom customers. He faces a long prison term, if convicted.

William J. Ruehle is just as unlucky—Broadcom’s former CFO (chief financial officer) has been indicted on the options charges as well.

Both Ruehle and Nicholas have pleaded not guilty. 

Samueli’s plea agreement, expected to be filed later today, will not require the him to testify on behalf of the government. Indeed, it would be unusual to ask him to do so, given that he has acknowledged providing false testimony to the Securities and Exchange Commission, Adkins said.

"It's not our custom to put perjurers on the stand," he said.

In a civil fraud lawsuit, the SEC has charged all three men and former Broadcom General Counsel David Dull with defrauding shareholders by concealing the true costs of employee stock options. The defendants denied wrongdoing and that case remains open.

Craig Berger, a New York-based stock analyst with FBR Capital Markets, has followed Broadcom and said he doubted the backdating case would affect the company's market performance. "I'm not going to justify Broadcom's actions, but this is what tech companies did back then," he said, adding that Broadcom's size seemed to be a target to federal authorities. "They're trying to make a point."

For more Anaheim Ducks news, including up to date analysis on possible players given up to free up cap room check out The Puck Drop: Your Source for Everything Anaheim Ducks.

Article Soure: Reckard, E. Scott and Christopher Goffard. "Broadcom co-founder Henry Samueli to plead guilty in stock options fraud case." Los Angeles Times 23 Jun 2008 23 Jun 2008

Image Source: Forbes Magazine via google

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