Judge Dismisses SEC Complaint, Drug Charges, Against Former Broadcom Executives in Case of Prosecutorial Misconduct
Yesterday, a federal judge dismissed alleged drug charges against Henry Nicholas, the former Chief Executive of Broadcom Corp., a manufacturer of integrated circuits for broadband communications. In a related civil action, the judge, U.S. District Judge Cormac Carney of the U.S. District Court for the Central District of California, also ordered the Securities and Exchange Commission to amend alleged fraud charges against Mr. Nicholas and other former Broadcom executives within seven days, stating that he found "serious problems of proof" with the SEC's complaint against the former executives and inquired as to what proof the SEC had against them, as reported by The National Law Journal. The court had previously dismissed the SEC's complaint without prejudice.
Last month, during the trial of Mr. Nicholas and former Broadcom Chief Financial Officer William Ruehle, the court had granted Nicholas' and other defendants' motions to dismiss charges of backdating stock options based on prosecutorial misconduct and entered judgments of acquittal. Judge Carney found that the government "distorted the truth-finding process" and infringed on the defendants' due process rights to a fair trial. The court also questioned the evidence supporting the charges, noting that there was "considerable debate" regarding certain accounting practices used by Broadcom and many other major companies, including Microsoft and Apple.
The defendants made their prosecutorial misconduct claims after the court granted immunity to former Broadcom executives David Dull and Henry Samueli at the request of counsel for Mr. Ruehle so that the witnesses would not refused to answer based upon their Fifth Amendment privilege against self incrimination. Mr. Ruehle wanted Mr. Dull and Mr. Samueli to testify in order to rebut the testimony of Nancy Tullos, former Broadcom Chief of Human Resources, a witness for the government who had pled guilty in 2007 to obstruction of justice charges. The court found that the prosecution had improperly influenced Dull's, Samueli's and Tullos' testimony. Judge Carney also reprimanded the government for leaking misleading information regarding the grand jury proceedings to the news media. It set a hearing for the government to show cause as to why the narcotics case against Mr. Nicholas should continue.
At trial, he court also set aside Mr. Samueli's plea of guilty to making alleged false statements to the SEC following his testimony in Mr. Ruehle's and Mr. Nicholas' trial, stating that he had difficulty finding how Mr. Samueli had committed any crime. Judge Carney found that the government had pressured Broadcom into terminating Mr. Samueli, calling the government's treatment of him "shameful."
The court furthermore criticized the government for leaving Mr. Dull "hanging in the wind" for two years, treating him as an alleged co-conspirator but not charging him. The prosecution had entered a nonprosecution agreement with Mr. Dull after threatening to charge him with perjury based upon statements which Mr. Dull intended to make in his testimony in the Ruehle/Nicholas trial.
The extensive allegations of prosecutorial misconduct in the case against Mr. Nicholas and the other defendants included an allegation by the defense that the government had used Mr. Nicholas' 13 year-old son to gather evidence against his father.
