Federal prosecutors decided Friday not to appeal a judge's recent
dismissals of criminal stock options backdating charges against Broadcom
Corp. co-founders Henry Samueli and Henry T. Nicholas III.
The decision brought to a close a two-year legal battle between the
billionaire executives and the Justice Department.
Late Friday, Nicholas released a statement that said, "The decision by
the Department of Justice reconfirms my faith in our criminal justice
In December, U.S. District Judge Cormac J. Carney dismissed the charges
against Samueli and Nicholas, accusing prosecutors of a "shameful" campaign
to intimidate witnesses and obtain unjustified convictions.
Prosecutors filed a notice of intent to appeal the dismissals to the 9th
U.S. Circuit Court of Appeals, but on Friday they informed the court they
would not file any appeals.
Thom Mrozek, a spokesman for the U.S. attorney's office in Los Angeles,
said prosecutors chose not to follow through with the appeal "after a
thorough evaluation of the issues." He declined to elaborate.
The decision comes two years after prosecutors filed the sensational
case, accusing Samueli, Nicholas and two other company executives of an
elaborate scheme to secretly increase the value of employee stock options
and failing to disclose the expense in regulatory filings. Nicholas was also
charged with distributing narcotics to friends and business associates.
The charges were a devastating blow to Samueli and Nicholas, who founded
the company in a Redondo Beach garage and turned it into one of the nation's
most prominent chip designers. Its chips are used in products such as Apple
iPhones, cable television boxes and laptop computers.
Samueli, who owns the Anaheim Ducks hockey team, pleaded guilty in 2008
to a charge of lying to investigators about how the company handled the
stock options. In December, Carney reversed the guilty plea and threw out
The judge subsequently dismissed all charges against Nicholas and
options-related charges against William J. Ruehle, the company's former
chief financial officer, and Nancy Tullos, its former human resources
director. Prosecutors also dropped plans Friday to appeal the judge's ruling
Samueli and Tullos could not be reached for comment.
The prosecutions began to unravel in December during Ruehle's trial.
Carney said prosecutors acted improperly when they contacted the lawyer for
a witness in the case and said he could face perjury charges if he testified
in court as he had to regulators.
Samueli, who had not yet been sentenced, testified as a defense witness
for Ruehle. He said that he thought the company had handled its employee
stock options properly and that neither he nor anyone at the company had
intended to deceive shareholders.
Samueli said he pleaded guilty to a charge of lying to regulators about
the options practices to avoid a sensational trial and the possibility of a
lengthy prison term.
Carney said he didn't believe Samueli knowingly had committed any crimes
and reversed Samueli's guilty plea. He threw out the case against Ruehle
before a jury was to begin deliberations and dismissed Nicholas' case before
the trial was scheduled to begin.