Nicholas
Attorneys for billionaire Henry T. Nicholas III have demanded that charges against their client be dismissed, arguing that federal prosecutors failed to demonstrate possible crimes in their 21-count indictment alleging accounting and securities fraud.
In another filing, Nicholas’ attorneys accuse grand jury members who approved the indictment of possible bias, because they might have owned stock in Broadcom Corp., the company Nicholas co-founded.
“Having such persons serve on the grand jury would be asking the very persons alleged to be victims of the purported crimes to determine whether to indict Dr. Nicholas, a proposition that is antithetical to the most fundamental notions of fairness and due process that are at the core of the criminal justice system,” said the motion, submitted by the Washington, D.C., law firm of Williams & Connolly.
As evidence, the defense notes that Broadcom is held in portfolios of CalPERS, which could disqualify state employees from the grand jury because the company’s stock is in their retirement fund.
Andrew Stolper, an assistant U.S. Attorney prosecuting the case, said he could not comment on the new filings.
“We’ll respond in our papers which are due in three weeks,” Stolper said.
A hearing on Nicholas’ motions is scheduled for Dec. 8. The trial is scheduled to begin in April.
Nicholas and his co-defendant, Broadcom’s former chief financial officer William Ruehle, are charged with conspiracy to defraud regulators and shareholders by concealing the true cost of $2.2 billion worth of employee stock options. The charges allege that Nicholas and Ruehle backdated stock options on 88 occasions to increase their value as employee compensation.
One of the motions to dismiss 12 of the 21 counts argues that Nicholas and Ruehle should not be charged because they did not “materially benefit” from alleged false statements in the company’s public filings — and because Broadcom was not harmed by the conspiracy. In fact, the defense notes, Broadcom’s stock rose after a series of the company’s internal investigation detailed the escalating non-cash cost of the scheme.
“Broadcom’s announcements that it would take non-cash compensation charges for stock option grants …had no negative effect on Broadcom’s stock price,” the motion said.
The 20 new defense motions, filed late Monday, are the latest in a string by Nicholas’ legal team to raise questions about prosecutorial conduct and other elements of the case. Nicholas’ attorneys tried without success to remove Stolper as a prosecutor, because he and his wife formerly worked for a law firm that represented Broadcom.
Earlier this month, Nicholas filed papers accusing Judge Cormac J. Carney of bias because he rejected a plea agreement in a related case by Henry Samueli, who co-founded Broadcom. Prosecutors filed a motion Monday opposing the efforts to dismiss Carney, arguing “Defendant raises a host of often contradictory allegations” about the judge’s conduct.
But Nicholas’ attorneys found Carney sympathetic when they demanded the government prove its reasons for seizing the billionaire’s Gulfstream jet.
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