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  • The Daily Dragon, by Mark Lacter
  • Judge Annihilates Feds over Broadcom
    Federal Judge Cormac Carney of Santa Ana, Calif., has dismissed all charges related to fraud and stock option backdating in connection with the government’s prosecution of Henry Nicholas III, co-founder of Broadcom, and William Ruehle, the company’s former CFO. The decision is not only an enormous win for McDermott Will’s Gordon Greenberg, who represents Nicholas, and Skadden’s Richard Marmaro and Williams & Connolly’s Brendan Sullivan, who defended Ruehle, but also a major indictment of the prosecution, led by Assistant U.S. Attorney Andrew Stolper.

    And we don’t use the term "major indictment of the prosecution" lightly. It's a real testament not only to Judge Carney but also the fabulous U.S. system of justice, which is still the best in the world. Especially on days like this.

    As Judge Carney noted the Broadcom defenders are true titans of the bar in every sense. Marmaro has long been considered the top dog in California’s white collar bar. Quiet in person, he is devastating in court and commands virtually unanimous acclaim and regard. We also need to note the work of Jack DiCanio, Marmaro’s longtime right hand. They earlier handled the defense of Brocade’s former CEO Greg Reyes.

    Adjectives are nearly superfluous when it comes to Sullivan, who is DC’s top dog and a master of the courtroom.

    Greenberg, meanwhile, is a tough and rapier-like former federal prosecutor who made headlines for convicting ZZZZ Best swindler Barry Minkow. He is also the creme of the white collar bar, and a great one-two punch with Marmaro.

    He had earlier allowed his client, Samueli, to plead guilty, a plea Carney rejected.

    Also in court today were a cadre of lawyers who represented David Dull, Broadcom’s unindicted former general counsel. They were led by Quinn Emanuel’s Jim Asperger (who was on the prosecution of Minkow with Greenberg in the day) and O’Melveny’s Seth Aronson.

    Earning Carney’s contempt were Stolper, Robb Adkins, Greg Staples and George Cardona, who went out of his way to note he had not been closely involved.

    Here are a few of the money quotes from the transcript:

    “I find that the government has intimidated and improperly influenced the three witnesses critiical to Mr. Ruehle’s defense, the cumulative effect of which distorted the truth finding process and compromised the integrity of the trial,” Carney said, referring to Dull, Nancy Tullos, the former VP of Human Resources, and Dr. Henry Samueli, the co-founder and former Chief Technical Officer. Among other things, the government met with Tullos 26 times and got her fired from her new job; and threatened to prosecute Dull if he testified consistently with his prior testimony to the SEC.

    The judge found that “The lead prosecutor somehow forgot that truth is never negotiable.”

    Carney reserved special ire for the government’s treating of Samueli, whom he called a brilliant engineer and man of incredible integrity about whom there was no evidence to indicate he did anything wrong. Despite that, the governmment interrogated him 30 times, falsely stated and improperly leaked to the media he was not cooperating, improperly pressured Broadcom to terminate him, and crafted an unconscionable plea agreement under which he would plead guilty to a crime he did not commit and pay a ‘ridiculous’ $12 million to the government. The government’s treatment of Samueli was “shameful and contrary to American values of decency and justice,” he said.

    The judge strongly cautioned the government against going forward with the remaining drug charge against Nicholas, and condemned the U.S. Attorneys for threatening to subpoena his 13-year old son to testify against his father.

    With respect to the stock option backdating claims, Carney said Apple and Microsoft were engaging in the same conduct as Broadcom.

    “I have a solemn obligation to hold the government to the Constitution,” he said. “I’m dong nothing more and nothing less.”

    We’re not going to give away the reaction of Greenberg, Sullivan and Marmaro, except to note that it involves not only a breathless lawyer and a 35th anniversary celebration of being admitted to the bar, but a reminder of the law’s majesty.

    Carney, meanwhile, is a Bush appointee who is an Air Force veteran and a former UCLA football standout.





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