Legal News

Lawyer for Broadcom Co-Founder Pleads Guilty, Cooperates

By Dan Slater

Will Henry T. Nicholas III be the only Broadcom defendant to see trial? Way too early to tell. But, on Friday, another plea deal was struck — this time, with a lawyer.

Broadcom co-founder Henry T. Nicholas III leaves the Ronald Reagan Federal Building after a hearing, June 16, 2008, in Santa Ana, Calif. Nicholas pleaded not guilty to federal drug and securities fraud charges. (AP/Nick Ut)

The last time we visited the crazy case, which involves alleged tales of drug-fueled plane flights hosted by Broadcom co-founder Henry T. Nicholas, former All Pac-10 wide receiver and U.S. District Judge Cormac Carney had said no way to a plea deal proposed for Henry Samueli, the company’s other co-founder. The deal between prosecutors and Samueli had called for five years’ probation and $12 million in payments. But Judge Carney said that would erode the public’s trust in the judicial system. Samueli is appealing.

Now comes another plea deal. Craig Gunther, a lawyer who oversaw Nicholas’s private dealings for more than five years, pleaded guilty Friday to two misdemeanors and agreed to cooperate with federal prosecutors who’ve charged Nicholas with fraud and drug violations. Gunther pleaded guilty to evading a banking law that requires that any cash transactions of $10,000 or more be reported to tax authorities. Here’s the LA Times report.

Craig Gunther reportedly became COO of Nicholas’s family office in 2001, when Nicholas allegedly was manipulating stock options to improperly reward employees. Nicholas also is accused of furnishing drugs to friends and associates. (Nicholas, who left Broadcom in 2003, has pleaded not guilty and is free pending trial.) Gunther faces up to two years in prison, AUSA Jeannie Joseph said at a hearing before Judge Carney. But under sentencing guidelines outlined in the plea agreement, a sentence of a year or even probation appears more likely, reports the LAT.

In a statement from his lawyer, Robert L. Corbin, Gunther said he never realized that the practice of structuring cash withdrawals under $10,000 was illegal. He said that for security and privacy reasons he had not wanted lower-level employees to handle larger amounts of cash.

Full post as published by Law Blog - WSJ.com on November 10, 2008 (boomark / email).