Judge Tentatively Rejects Ex-Gemstar CEO’s Plea Deal

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Gemstar-TV Guide International Inc. won a court victory Monday after a federal judge tentatively rejected a proposed plea deal between former chief executive Henry Yuen and prosecutors in the U.S. Attorney’s office in Los Angeles.


As part of the plea deal, Yuen admitted he destroyed documents during a separate investigation by the Securities and Exchange Commission, which has charged that Gemstar inflated its revenue by $248 million from 2000 to 2002. In exchange, Yuen agreed to six months of home detention, a $1 million charitable donation and a $250,000 fine.


That kind of sentence “sends the wrong message to corporate America with respect to the kind of punishment that can be expected,” said U.S. District Judge John Walter on Monday.


Walter is expected to make a final decision on the proposed sentence on Jan. 23, after the SEC’s civil trial would be over. That trial is pending in the U.S. District Court in Los Angeles.


In that case, Gemstar faces the possibility of paying Yuen $29.5 million in severance payments that were temporarily frozen in bank accounts by the SEC. The company could avoid paying the severance if Yuen receives a harsher sentence.


Last month, Gemstar sought a more severe sentence against Yuen in the criminal case. The company also took the unusual step of asking the U.S. Attorney’s office in the Middle District of Florida to launch a separate investigation of the allegations against Yuen.


Yuen’s lawyer, Stanley Arkin, a partner at Arkin Kaplan LLP, has called Gemstar’s moves part of “an insincere, malicious litigation ploy” used to avoid paying his client a severance package.

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