Ducks owner Samueli pleads guilty to SEC charge
Expected to net probation, fine
Broadcom Corp. co-founder Henry Samueli pleaded guilty Monday to lying to the U.S. Securities and Exchange Commission as it probed stock-option backdating at the chip maker.
Samueli, a billionaire philanthropist and owner of the NHL's Anaheim Ducks, told U.S. District Court Judge Cormac J. Carney he was guilty of the single felony of making a false statement.
The plea agreement is part of a larger federal criminal probe into stock-option backdating at Broadcom, which was ultimately forced to write down $2.2 billion US in profits — the largest accounting restatement to date because of illegal backdating.
This month, Broadcom co-founder and former chief executive officer Henry T. Nicholas was indicted on conspiracy, securities fraud and drug charges.
At Samueli's sentencing, set for Aug. 18, Carney is to decide whether he approves the plea agreement Samueli reached with prosecutors.
It calls for five years of probation, payment of $12 million US to the U.S. Treasury and a fine of $250,000 US.
Samueli is not required to help prosecutors and will not face prosecution on any stock options backdating allegations, assistant attorney Robb Adkins told the judge.
He will not, however, receive immunity from prosecution if called as a defence witness by fellow Broadcom officers indicted in the wide-ranging case, the prosecutor said.
Samueli also forfeited his right to appeal.
Samueli, 53, left the court in Santa Ana, Calif., through a side door holding hands with his wife, Susan, and slipped into a waiting minivan.
He did not comment and his attorney, Gordon Greenberg, also declined comment.
CFO also indicted
Broadcom's former chief financial officer, William J. Ruehle, 66, was indicted on conspiracy, securities fraud and other charges the same day as Nicholas.
A second indictment alleges that Nicholas, 48, slipped ecstasy into the drinks of business associates, maintained a drug warehouse and concealed illegal conduct with bribes and death threats.
Nicholas and Samueli, his adviser in graduate school, founded the semiconductor maker in 1991.
In May, after the SEC filed its civil complaint against him, Samueli stepped down as chairman of the board of directors and took a leave of absence as chief technology officer.
Both Nicholas and Ruehle have pleaded not guilty and are free on bail.
Broadcom's former vice president of human resources, Nancy Tullos, pleaded guilty to obstruction of justice earlier this year in exchange for her co-operation in the case.
In April, the Irvine-based company agreed to pay the SEC $12 million US to settle a civil complaint related to stock option backdating, but did not admit any wrongdoing.
Backdating stock options involves retroactively setting the exercise price to a low point in the stock's value to increase profits for an executive or employee when shares are sold.
If companies backdate options without properly disclosing and accounting for the move, it can cause profits to be overstated and taxes to be underpaid.
Donated millions to performing arts
Backdating is legal when properly accounted for.
Exhibits filed with the plea documents Monday show Samueli told Tullos by e-mail to backdate stock options for certain officers.
In addition to owning the Ducks, the Samuelis have donated millions to the performing arts in Southern California and to the University of California at Irvine medical school.
In March, former Biovail CEO Eugene Melnyk was charged by the Ontario Securities Commission and the U.S. Securities and Exchange Commission in connection with misleading accounting statements.
Melnyk owns the Ottawa Senators.
William Del Biaggio, a minority owner with the Nashville Predators, was also slapped in early June with a series of civil lawsuits by lending institutions that allege he obtained loans fraudulently.
He is also reportedly the subject of a U.S. federal probe.