Broadcom Backdating Probe Reveals Attorney Misconduct

November 11, 2008 ( - An attorney who worked for Broadcom Corp. co-founder and former CEO Henry T. Nicholas III has pleaded guilty to evading a banking law and says he will cooperate with the federal government in a stock options backdating probe involving Nicholas.

According to the Associated Press, Craig Gunther, who oversaw the private dealings of Nicholas for more than five years, pleaded guilty to evading a banking law that requires that cash transactions of $10,000 or more be reported to tax authorities. The AP said prosecutors claimed Nicholas regularly requested tens of thousands of dollars in cash, and Gunther would sign several checks of $9,500 to circumvent the reporting requirement.

However, Gunther said in a statement released by his attorney that he did not realize the practice was illegal.

Under sentencing guidelines outlined in the plea agreement, a sentence of a year or even probation could be imposed.

Nicholas and three other executives have been charged in what the Securities and Exchange Commission called a “five-year systematic scheme to secretly backdate stock options granted to virtually all Broadcom officers and employees.” (See Four Broadcom Execs Hit with Backdating Charges )

In April, the company agreed to settle charges of stock options backdating and pay a $12 million penalty (See Broadcom to Pay $12M to Settle Options Backdating Charges ).