Anaheim Ducks: Henry Samueli to Plead Guilty in Broadcom Case

By Ken Armer, Senior Ducks Writer for The Puck Drop

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, and helped make Samueli one of the most influential and superrich men in Southern California, including giving him the ability to buy the Anaheim Ducks, which a he bought in 2005 for $75 million and are currently worth substantially more now after their Stanley Cup victory in 2007.

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

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

The U.S. Attorney’s Office in Santa Ana said today 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 and 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 exec’s. 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, and 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 who has followed Broadcom, 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 make it a target to federal authorities. "They're trying to make a point."

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

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