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Federal judge dismisses fraud charges against former Broadcom executives

By Bernard Hibbitts (editor) and University of Pittsburgh School of Law students.

[JURIST] A federal judge on Tuesday dismissed charges of fraud and conspiracy against two former executives of microchip maker Broadcom Corp. citing prosecutorial misconduct. Judge Cormac Carney of the US District Court for the Central District of California dismissed charges against Broadcom's former CEO and co-founder Henry Nicholas and former CFO William Ruehle, saying that US prosecutors improperly influenced three key witnesses on whom both Nicholas and Ruehle would have relied to prove their innocence. Carney cited evidence that the lead prosecutor on the case, Assistant US Attorney Andrew Stolper, had provided information to newspapers about former Broadcom Chairman Henry Samueli in order to get him to plead guilty to similar charges. The judge also said that Stolper had sought to influence the testimony of Broadcom's former general counsel David Dull and former vice president of human resources Nancy Tullos. The judge also dismissed a civil complaint by the Securities and Exchange Commission (SEC) against Nicholas, Ruehle, Samueli, and Dull. The decision to dismiss was surprising since Nicholas's dismissal was without a motion and it took place during Ruehle's trial, which was all accompanied by the denial of the SEC complaint. Nicholas and Rhuele had been indicted in June 2008 for "conspiracy to disguise, conceal, understate, and mischaracterize compensation expenses Broadcom was required to recognize in connection with its stock options." Nicholas was also indicted separately on drug charges, and a hearing is set for February to decide whether those charges should be dismissed as well because of misconduct. The dismissal follows a similar decision in August by the US Court of Appeals for the Ninth Circuit to overturn the conviction of former Brocade Communications Systems CEO Gregory Reyes for backdating stock options. The appeals court overturned Reyes's 2007 conviction and sentence finding that the prosecution had made a false assertion of material fact to the jury in the closing argument.

Full post as published by JURIST - The Paper Chase on December 16, 2009 (boomark / email).