Accused of securities fraud, a co-founder of Broadcom Corp. wants to bar the public from his hearing before the 9th Circuit Court of Appeals. -DB

The National Law Journal
August 20, 2-009
By Amanda Bronstad

Henry Samueli, the co-founder of Broadcom Corp., is fighting to keep the public out of a pending hearing before the 9th U.S. Circuit Court of Appeals in which he is seeking to reinstate a plea deal that he reached last year with prosecutors.

Under the proposed plea in the U.S. government’s criminal case involving alleged stock options backdating at Broadcom, Samueli would have admitted making a false statement to the U.S. Securities and Exchange Commission regarding his role in the backdated stock options, which forced Broadcom to restate more than $2.2 billion in earnings in 2007. He would have served five years on probation and paid a $250,000 fine, plus $12 million to the U.S. Treasury.

On Sept. 8, 2008, U.S. District Judge Cormac Carney of the Central District of California rejected that deal on the ground that it would “erode the public’s trust in the fundamental fairness of our justice system” and give the perception that “justice is for sale.”

The judge identified Samueli as an unindicted co-conspirator—referred to as “H.S.”—in an indictment that federal prosecutors brought earlier in 2008 against Broadcom’s other co-founder and former chief executive, Henry Nicholas, and its former chief financial officer, William Ruehle, both of whom face life sentences if convicted on all counts.

“The Government has publicly levied very serious allegations of securities fraud against Dr. Samueli that, if true, warrant a significant prison sentence,” Carney wrote at the time. “If there is any truth to these allegations, a probationary sentence does not adequately reflect or account for the seriousness of the underlying misconduct alleged against Mr. Samueli.” He noted that a presentence report recommended that Samueli serve a year in prison.

Briefs filed by Samueli and federal prosecutors appealing the judge’s decision have been sealed. Oral argument on the appeal is scheduled for Sept. 2 at the 9th Circuit’s courthouse in Pasadena, Calif.

In an Aug. 5 motion before the 9th Circuit, Samueli argued that the hearing should be closed to the public because much of the same information that required briefs to be sealed would be brought up during the hearing. He also requested that transcripts and recordings be sealed.

Federal prosecutors argued in their reply motion that the oral argument should be open to the public because the First Amendment right to access applies to plea agreements.

“Though certain documents have been sealed by the district court and this court, the government does not believe that references to the portions of those few documents that provided the basis for the sealing are necessary at oral argument, as the district court expressly did not rely on the sealed material in rejecting defendant’s plea agreement,” prosecutors wrote.

In his subsequent reply, Samueli argued that much of the information upon which Carney relied is confidential.

“One of Dr. Samueli’s main challenges is to the district court’s improper disclosure and reliance on unindicted co-conspirator allegations in an indictment against others,” his attorney wrote. “Both the content and unreliability of these allegations have been addressed in the briefs and presumably will be discussed at oral argument.”

Assistant U.S. Attorney George Cardona, who is prosecuting the case, and Samueli’s attorney, Gordon Greenberg, a partner in the Los Angeles office of McDermott, Will & Emery, did not return calls seeking comment.

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