Henry Samueli - Financial Investigation

Financial Investigation

Both the Securities and Exchange Commission, as well as the Department of Justice had been investigating Broadcom Corporation for backdating of stock options. Although an internal Broadcom investigation cleared Samueli in mid-February 2007, Samueli hired his own attorney confirming that "the company and Samueli were responding to investigators separately".

On May 15, 2008, Samueli resigned as Chairman of the Board and took of a leave of absence as Chief Technology Officer after being named in a civil complaint by the SEC.

On June 23, 2008, Samueli pleaded guilty for lying to SEC for $2.2 billion of backdating. Under the plea bargain, Samueli agreed to a sentence of five years probation, a $250,000 criminal fine, and a $12 million payment to the US Treasury.

During the technology boom in the 2000s, Samueli and Broadcom co-founder Henry T. Nicholas III awarded millions of stock options to attract and reward employees. Prosecutors alleged Samueli and Nicholas granted options to others, including some other top executives but not themselves, to avoid having to report $2.2 billion in compensation costs to shareholders.

Prosecutors focused on the fact that Samueli denied under oath any role in making options grants to high-ranking executives. As part of his plea agreement, Samueli admitted the statement was false, and admitting to being part of the options-granting process while not acknowledging that the options awards were flawed. However, an internal Broadcom probe laid the majority of blame on Henry Nicholas and William Ruehle. Nicholas has been distanced from the company since leaving in 2003 and later facing drug charges.

On September 8, 2008, U.S. District Court Judge Cormac Carney (a fellow UCLA alumnus) rejected a plea deal that called for Samueli to receive probation, writing: "The court cannot accept a plea agreement that gives the impression that justice is for sale".

16 months later, on December 10, 2009, U.S. District Judge Cormac J. Carney dismissed the case against Broadcom Corp. co-founder Henry Samueli of a criminal charge of lying to investigators in a probe of improper accounting at the Irvine microchip designer, citing significant prosecutorial and police misconduct and attempts by the United States Government to coerce and intimidate Samueli and others into guilty pleas.