Henry Yuen, the former chairman and chief executive of Gemstar-TV Guide International Inc., plans to plead 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.
Yuen received a subpoena during a civil Securities and Exchange Commission investigation that started in October 2002, according to the 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.
Yuen’s plea agreement, which came after an investigation by the FBI, was filed on Tuesday, the U.S. Attorney said.
As part of the plea agreement, 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.
The SEC sued Gemstar in 2003 alleging 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.
Earlier this month, 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. 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.
