Samueli, colleagues charged with fraud

The Securities and Exchange Commission brought charges against two current and former top officers of the Irvine-based Broadcom Corporation today, alleging they conspired over a period of five years to backdate the stock options granted to employees and executive officers.

The complaint alleges that former Chief Executive Henry T. Nicholas, Chief Technology Officer Henry Samueli, former Chief Financial Officer William J. Ruehle and General Counsel David Dull manipulated the filing dates of employee and officer stock options to coincide with the dates of historically low closing prices, without properly recording the compensation expenses associated with such options.

Samueli, a notable philanthropist who has given to UCI and the Orange County Performing Artscenter, has resigned as chairman of the company’s board of directors, a Broadcom news release stated.

Samueli, Nicholas and Dull are all residents of Newport Beach, according to the complaint.

The SEC estimates Broadcom reported more than $2.22 billion in additional compensation expenses as a result of the alleged scheme.

“The executives at Broadcom perpetrated a massive, five-year scheme that involved fraudulent backdating of dozens of option grants, falsifying corporate records, intentionally false accounting, and lying to shareholders,” the SEC’s Director of Enforcement Linda Chatman Thomsen said in a statement. “This egregious misconduct resulted in the largest accounting restatement to date arising from stock option backdating.”

The SEC further alleges Ruehle and Dull benefited from the maneuvers, receiving and exercising backdated grants that were overpriced by more than $100,000 and $1.8 million for Ruehle and Dull, respectively.

A statement issued from Samueli’s lawyer, Gordon Greenberg, laments that the “SEC disregarded [his] written request to refrain from trying their case in the media.”

“The SEC failed to mention that an independent team of lawyers and forensic accountants hired by Broadcom’s outside board members thoroughly examined Broadcom’s options granting process, and filed a report that fully exonerated Dr. Samueli,” the statement reads. “That investigation concluded that Dr. Samueli ‘reasonably relied on management and other professionals regarding the correct option accounting treatment and grant approval process.’”

The statement adds Samueli has no formal training in accounting and disputes the SEC’s claim that he was responsible for processing or accounting company stock options.

Attempts to reach SEC representatives for comment were not successful.

CHRIS CAESAR may be reached at (714) 966-4626 or at chris.caesar@latimes.com.