Broadcom Execs Named in Stock-Backdating Case

Jan 25, 03:51 PM

Jan. 25--The co-founders of Broadcom Corp., Henry Samueli and Henry T. Nicholas III, were called "unindicted potential co-conspirators" in a federal court case Wednesday in which a former Broadcom vice president pleaded guilty to obstruction of justice.

It was the first time Nicholas, who resigned as Broadcom's chief executive officer in 2003, or Samueli, Broadcom's chairman and chief technical officer, were named in the federal criminal probe into the company's alleged backdating of employee stock options.

Brad Brian, Nicholas' attorney, said in a statement that his client did not benefit or do anything illegal and Tullos' plea did not change that. A spokesman for Samueli said he could not comment.

The two billionaires' names came out during a plea hearing for Nancy Tullos, Broadcom's former vice president for human resources.

Tullos pleaded guilty to one count of obstruction of justice for asking one employee to delete an e-mail message that showed another employee had been hired after the date at which his options were offered. She could be sentenced to up to 10 years.

Until Wednesday, Tullos' guilty plea referred to Nicholas as "Executive A" and Samueli as "Executive B." Prosecutor Andrew Stolper said he had not named the executives because they were "unindicted potential co-conspirators." He declined to elaborate after the hearing.

U.S. Dictrict Court Judge Cormac J. Carney said he wanted the names of the executives to ensure the plea agreement met standards of justice.

"I'll concede arguably it might be embarrassing," Carney said.

An unindicted co-conspirator is someone who may be a witness or may be prosecuted later, or officials may lack the evidence required to prosecute the person, said Jack Earley, a criminal defense lawyer not involved in the case.

"The judge is just saying for her plea, he needed more information," Earley said when told about what had happened in the courtroom. "There has to be a showing that that was a real person."

A year ago, Broadcom announced a $2.25 billion non-cash restatement of its finances to properly account for employee stock options that had been awarded at below-market prices. Broadcom's investigation held Tullos, Nicholas and former Chief Financial Officer William Ruehle responsible for improperly awarding the options, but exonerated Samueli.

Also Thursday, Broadcom reported net income of $90.3 million on revenue of $1.03 billion for the fourth quarter of 2007. The Irvine semiconductor company's profits were double the same quarter in 2006. Revenue climbed 11.2 percent.

For all 2007, Broadcom reported income of $213.3 million on revenue of $3.67 billion.

Broadcom Chief Executive Officer Scott McGregor forecast revenue for the first quarter of 2008 at $975 million to $1 billion, powered by growing sales of Bluetooth, wireless networking and digital TV set top products.

By John Gittelsohn and Andrew Galvin

-----

To see more of The Orange County Register, or to subscribe to the newspaper, go to http://www.ocregister.com.

Copyright (c) 2008, The Orange County Register, Calif.

Distributed by McClatchy-Tribune Information Services.

For reprints, email tmsreprints@permissionsgroup.com, call 800-374-7985 or 847-635-6550, send a fax to 847-635-6968, or write to The Permissions Group Inc., 1247 Milwaukee Ave., Suite 303, Glenview, IL 60025, USA.

BRCM, Broadcom Execs Named in Stock-Backdating Case
Back to Current Headlines