Henry Yuen, the former chairman and chief executive of Gemstar-TV Guide International Inc., on Tuesday pleaded guilty to criminal charges of obstructing an SEC investigation into accounting irregularities at the company, according to the U.S. Attorney's office in Los Angeles.
As part of the plea agreement, which came after an investigation by the FBI and was filed on Sept. 20, Yuen will be sentenced to six months of home detention, as part of two years of probation in which he may not serve as an officer or director of any publicly traded company. Yuen also must donate $1 million to charities representing low-income victims of fraud and pay an additional $200,000 fine.
Yuen, who on Tuesday was scheduled to be sentenced on Dec. 19, has until then to agree to the sentence. If he doesn't agree, he can withdraw his guilty plea and the case will go to trial, the U.S. Attorney's office said. Yuen is said to be facing as much as 5 years in prison.
Yuen received a subpoena during a Securities and Exchange Commission investigation that started in October 2002, according to a U.S. Attorney's statement. Instead of turning over e-mails and corporate documents, he deleted them from his office computer, according to the U.S. Attorney's account of the plea agreement.
Then, the day before he was scheduled to testify before the SEC, he ran a computer program that prevented the documents from being recovered, the U.S. Attorney's statement said. He also had the computer's hard drive removed from the office.
The SEC sued Gemstar in 2003, alleging that the company under Yuen's stewardship reported false advertising sales to inflate revenue by $248 million between 1999 and 2002. The company's shares fell in September 2002 as losses accumulated.
In early September, a federal judge allowed the SEC's civil fraud case against Yuen and Elsie Leung, the former chief financial officer of Gemstar, to proceed. The pair attempted to throw out the case on grounds they relied on the opinions of the company's outside auditor in reporting financial information. Los Angeles-based Gemstar settled with the SEC last year for $10 million.
The auditor, KPMG LLP, also settled a class-action lawsuit brought by the company's shareholders for $25 million. Last year, Gemstar settled the shareholder suit for $67.5 million.
*Reporter Amanda Bronstad contributed to this story.
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