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Broadcom Case Dismissed: William J. Ruehle and Henry T. Nicholas Exonerated

Some members of the local legal community were surprised on Tuesday, December 15, 2009, when a U.S. District Judge Cormac J. Carney acquitted former Broadcom chief financial officer William J. Ruehle, and dismissed charges of fraud and backdating stock options against former Broadcom CEO Henry T. Nicholas. However, the judge did more than just dismiss the case with prejudice on the ground of prosecutorial misconduct, which is likely to preclude the case from ever being prosecuted again.

The judge also launched an attack on the federal prosecutors handling the case scorning them for intimidating and threatening key witnesses and lacking evidence to prove the allegations of backdating stock options in order to lower the Irvine semiconductor manufacturing giant compensation expenses on its financial statements to shareholders.

Broadcom is an Irvine chipmaker that during 10 years of public trading had grown into the largest technological company in Orange County employing 7,200 people worldwide and posting $4.6 billion in revenue in 2008. The trouble for the company started in 2007, when it announced a $2.2 billion in undisclosed compensation expenses as part of backdated stock option grants.

At the initial phase of criminal proceeding, the prosecution was able to secure the testimony of a former administrative assistant who had told former chief financial officer Ruehle that stock option backdating was an error in judgment. However, the prosecution was allegedly involved in intimidating witnesses and threatening their attorneys with filing criminal charges against witnesses in a failed attempt to shape their testimony ahead of the upcoming trial.

Judge Carney found this to be a prosecutorial misconduct, and compelled the prosecution to sign a non-prosecution agreement with the intimidated witness. In addition, the prosecution’s case-in-chief was badly damaged by the court’s finding that the government’s key witness to be unreliable. Dismissing a high profile federal criminal case on the ground of prosecutorial misconduct and lack of evidence is a quite unusual step for the court. However, Judge Carney found additional support for his position in quoting the former U.S. Supreme Court Justice Warren E. Burger, who once stated that prosecutors may strike hard blow, but never foul blows.

This case demonstrates that it is essential to contact an experienced California federal criminal defense attorney who will not give up and find every possible option for a defense. The attorneys at Wallin & Klarich have over 30 years of federal criminal defense experience and know how to handle these serious federal criminal matters. Call 1-888-280-6839 to speak to one of Wallin & Klarich’s aggressive and experienced criminal defense attorneys in California today. Please visit us at www.wklaw.com. We will be there when you call.

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