Judge rejects Samueli plea deal, delays sentencing

SANTA ANA, California (Reuters) - A federal judge rejected a proposed plea agreement sentence of probation and a fine for Broadcom Corp co-founder Henry Samueli as too lenient, and postponed his sentencing.

Samueli, 53, pleaded guilty in June to a charge of making a materially false statement to U.S. Securities and Exchange Commission investigators following the company's restatement of $2 billion in compensation expenses last year.

Samueli's plea deal with prosecutors called for five years probation and $12.25 million in fines and forfeitures, but approval was needed from U.S. District Judge Cormac Carney.

Carney said in court on Monday the crime was serious and "could warrant a significant prison sentence."

"The court is not alone in concluding that a five-year probationary sentence does not capture the seriousness of Dr. Samueli's alleged misconduct," Carney wrote in a tentative ruling he made final in court.

"It would erode the public's perception of our justice system to accept a plea agreement containing an unprecedented payment of $12 million to resolve a criminal liability of one of four conspirators in an alleged $2.2 billion securities fraud."

U.S. Attorney's spokesman Thom Mrozek said prosecutors and Samueli have "several different possibilities", including a new agreement or continuing with the present deal.

"If we can't reach any agreement he may be subject to indictment, we will be in discussions with his attorney in the near future," Mrozek said. "We are prepared to go to trial."

SENTENCING DISPARITIES

Samueli and his attorneys declined to comment after the hearing.

Samueli's plea agreement came after growing government enforcement action against Broadcom and its top officers, including the June indictment of co-founder Henry Nicholas III on backdating and drugs charges.

The former chief financial officer, William Ruehle, also has been indicted on criminal charges related to backdating.

Ruehle and Nicholas have pleaded not guilty to the charges.

In May, the SEC filed a civil action against Samueli, Nicholas, Ruehle and Broadcom Chief Counsel David Dull, alleging they schemed from 1998 to 2003 to secretly backdate stock option grants.

Samueli resigned as chairman following the SEC filing of the civil complaint. Nicholas, Ruehle and Dull have denied wrongdoing.

In rejecting the plea deal, Judge Carney cited the seriousness of the allegations in both cases, as well as potential sentencing disparities that could land the other Broadcom executives in prison for life while Samueli, who has no obligation to cooperate with the government, walked free.

The judge also pointed out that the U.S. Probation office

recommended a 12-month prison sentence for Samueli.

Carney postponed the sentencing and set a September 29 hearing, saying he preferred to sentence Samueli after hearing more evidence about Nicholas' and Ruehle's role in the alleged backdating fraud.

(Reporting by Syantani Chatterjee; writing by Gina Keating' editing by Jeffrey Benkoe and Carol Bishopric)