LOS ANGELES — A judge has rejected a plea deal reached between federal prosecutors and Henry Samueli, the co-founder and former chief technical officer of Broadcom Corp., in a criminal backdating probe, finding that the agreement would “erode the public’s trust in the fundamental fairness of our justice system.”

“To serve justice, the sentence must reflect the severity of the offense conduct, including all the facts and circumstances of the crime. The sentence must not create an obvious disparity between one criminal actor and other similarly situated criminal actors. And the sentence must protect the public’s interest in enforcement of, and respect for, our laws and system of justice,” wrote U.S. District Judge Cormac Carney of the Central District of California in a ruling on Monday, when Samueli had been scheduled to be sentenced. “For a number of reasons, this plea agreement does not satisfy those important principles.”

Broadcom, an Irvine, Calif.-based broadband communications manufacturer, was forced to restate more than $2.2 billion in January 2007 — the largest restatement to date stemming from stock options backdating.

Samueli had pleaded guilty in June to one count of making a false statement to the U.S. Securities and Exchange Commission regarding his role in the granting of backdated stock options. Under the deal, he agreed to serve five years probation and pay a $250,000 fine, plus a $12 million payment to the U.S. Treasury. The deal does not require him to cooperate with federal prosecutors, who have indicted Broadcom’s other co-founder and former chief executive, Henry T. Nicholas, and former chief financial officer William Ruehle. Both have pleaded not guilty.

In his ruling, Carney noted that, in the government’s indictment against Nicholas and Ruehle, Samueli, referred to as “H.S.,” is an unindicted co-conspirator; yet, Nicholas and Ruehle face potential life sentences if convicted on all counts. The allegations against Samueli are “both extensive and troubling,” the judge concluded.

“The Government has publicly levied very serious allegations of securities fraud against Dr. Samueli that, if true, warrant a significant prison sentence,” he wrote. “If there is any truth to these allegations, a probationary sentence does not adequately reflect or account for the seriousness of the underlying misconduct alleged against Mr. Samueli.” Carney said a presentence report found that probation was inappropriate and that Samueli, an “active and knowing participant” in the backdating scheme, should serve a recommended 12 months in prison. The judge also said that most defendants convicted of fraud crimes in the 9th U.S. Circuit Court of Appeals go to prison, on average, for about 17 months ­ a disparity the judge called “indefensible.”

Carmac also ridiculed the $12 million payment, which “suggests that Dr. Samueli’s wealth and popularity will allow him to avoid the consequences of his alleged misconduct at Broadcom. The Court cannot accept a plea agreement that gives the impression that justice is for sale.”

He also said Samueli should have been forced to cooperate with prosecutors.

Another former Broadcom executive, Nancy Tullos, who was vice president of human resources, pleaded guilty last year to obstruction of justice charges and has been cooperating in the case.

According to the allegations, Samueli and Nicholas were sole members of Broadcom’s options committee, which granted stock options to most Broadcom employees.

“We’ll be having discussions with Mr. Samueli’s attorney in the coming days, and we look forward to seeing Judge Carney again in three weeks, at which time we will likely know what direction the case against Samueli is heading,” said Thom Mrozek, a spokesman for the U.S. Attorney’s Office, for the Central District of California. “We understand Judge Carney’s concerns. And we’ll be taking those into account during our discussions with defense counsel.”

Tisha Kresler, a spokeswoman for Samueli and Gordon Greenberg, a partner in the Los Angeles office of McDermott, Will & Emery, who represents Samueli, declined to comment.
 
A hearing in the case is scheduled for Sept. 29.