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         Nadia: Stepping Out ENTERTAINMENT  Editor

 

 

 

 

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 Breaking NewsYOUR SOURCE FOR CALIFORNIA, NATIONAL & GLOBAL BREAKING NEWS

Billionaire Nicholas' attorneys ask court to dismiss case

by Michael Webster: Investigative Reporter July 15, 2008 9:30 AM PDT

13_nicholas1_large.jpg

 

 

 

 

 

 

Billionaire Henry T. Nicholas

Attorneys representing Orange County Billionaire Henry T. Nicholas’  has moved to dismiss the lawsuit of accounting fraud charges stemming from a $2.2 billion employee stock option backdating scheme accusing the former Broadcom Corp. chief executive and others.

Nicholas’ attorneys said in a recent motion filed that the SEC case against their client fails in more than three ways to prove their case against him.

1. The suit was filed after a statute of limitations expired on most of the allegations.

2. Most of the alleged wrongdoing occurred before enactment of the Sarbanes-Oxley Act, which made corporate directors responsible for accounting.

and 3, Most of the complaints do not directly tie Nicholas to any wrongdoing.

The feds claim Nicholas as the master mine and three co-defendants all of hiding the fact from investors, accountants and others in an an alleged five-year scheme to over inflate the value of employee compensation. They are accused of altering employee stock options by back dating them and by claiming the employees have the right to purchase stock at a future date at a fixed price.

In a earlier understanding with the fed and the Broadcom corporation agreed to pay the SEC $12 million to settle those allegations, without admitting guilt or other wrongdoing. The company admitted that they engaged in a five-year $2.2 billion backdating scheme that defrauded investors and violated accounting laws.

Nicholas’ co-defendants had already filed similar documents demanding dismissal of the SEC lawsuit. The other named defendants are: Henry Samueli, who co-founded Broadcom with Nicholas. In a federal criminal case, Samueli pleaded guilty to lying to the SEC about his role in allocating employee stock options. Samueli agreed to pay $12 million and spend three years on probation in return for settling the criminal case. His formal sentencing is set for Aug. 18. 2008. William J. Ruehle, Broadcom’s former chief financial officer  plead not guilty to federal criminal charges related to the options backdating scheme. David Dull, Broadcom’s general counsel, who was not charged with any criminal wrongdoing.

Nicholas has been charged separately with using and distributing illegal drugs. He has pleaded not guilty. That trial is scheduled to occur after completion of the criminal backdating case, which is scheduled to begin in April 2009. Nicholas has pleaded not guilty in all of the criminal cases.

Prosecutors have asked that the SEC’s lawsuit take a back seat to the criminal case, a move that Ruehle’s attorneys oppose. The next hearing in the SEC case is scheduled for Aug. 4 at U.S. District Court in Santa Ana California.

Article photo by L.A. Times. and other

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