Broadcom co-founder bets he can still avoid prison

Broadcom co-founder Henry Samueli is gambling that an appeals court will accept a plea deal that would spare him prison time in one of the largest U.S. stock options backdating cases.

Samueli is leaving his guilty plea in place as he pursues the appeal, his attorney, Gordon Greenberg, said Tuesday during a hearing in U.S. District Court before U.S. District Judge Cormac J. Carney.

In June, Samueli pleaded guilty to lying to investigators from the Securities and Exchange Commission about backdating at Broadcom.

He made the plea under a deal with federal prosecutors that would have let him pay $12 million and get probation instead of prison.

Carney rejected the deal as too lenient, saying he did not want the public to think the billionaire owner of the NHL Anaheim Ducks could buy justice.

On Tuesday, Carney warned Samueli that if he loses his appeal, he could face a harsher sentence than the one he had agreed to with prosecutors. Samuel's sentencing is set for Aug. 3.

Under the plea agreement, Samueli would have served five years probation and paid $12 million to the federal government in addition to a $250,000 fine — the maximum allowed by law for the offense.

Samueli would not have been required to help federal prosecutors build their cases against Broadcom's former chief financial officer William J. Ruehle and company co-founder Henry T. Nicholas III, who are accused of conspiracy and securities fraud in connection with the backdating probe.

Nicholas also faces drug-related charges, including accusations that he slipped ecstasy into the drinks of business associates.

Nicholas and Ruehle have pleaded not guilty and are free on bail. If convicted, each could face life in prison.

Backdating involves retroactively setting a stock option's exercise price to a low point in the stock's value, boosting the profits that are attained when the shares are sold. It is legal when properly accounted for, but if companies fail to properly disclose the move, profits can be overstated and taxes underpaid.

The probe into Broadcom's options backdating led the Irvine, California-based telecommunications chipmaker to write down $2.2 billion last year, the largest restatement of its kind.