The Truth is Not Negotiable: Court Dismisses Broadcom Prosecution Based on Prosecution Intimidation of Witnesses

U.S. District Judge Cormac Carney dismissed the charges against Broadcom’s former finance chief William Reuhle and threw out the charges against former CEO and co-founder Henry Nicholas. Ruehle and Nicholas were indicted last year for retroactively deciding the dates when Broadcom employees received their stock-option grants to increase the employees’ profits. Irvine, California-based Broadcom had to reduce reported earnings by $2.22 billion from 1998 to 2005 for underreported compensation expenses, the largest backdating- related restatement for any company.

As to defendant Ruehle, the judge directed a verdict of acquittal which means the ruling is probably appellate proof. Under a U.S. Supreme Court ruling known as “
Martin Linen Supply,” the Double Jeopardy clause bars retrial of the defendant. In October of this year the Supreme Court turned back a frontal challenge to this ruling. Michigan v. Williams, Supreme Court No. 08-1103. In Williams, the Court ordered an answer, and the petition was filed by attorney was a veteran Supreme Court litigator and has published many challenges to the ruling. The SEC suit and the prosecution of Mr. Nicholas appear to be subject to an appeal.

Judge Carney found the lead prosecutor, Andrew Stolper, leaked information about former Broadcom Chairman Henry Samueli’s purported lack of cooperation with the investigation to newspapers in order to force him to plead guilty. The prosecutor also tried to influence the testimony of Broadcom’s former general counsel David Dull after the judge had granted him immunity, Carney said. In addition, the judge said, Stolper caused Broadcom’s former head of human resources, Nancy Tullos, to lose her job at a different company as part of an effort to get her to cooperate with the investigation. Tullos, who pleaded guilty to obstruction of justice, was a key government witness at the trial.

To read the Bloomberg summary of the ruling,
click here. To read the transcript of the proceedings, click here. ruehle_dec__15