Former chief executive of Gemstar-TV Guide Internatioanl Inc. Henry C. Yuen was found liable for securities fraud, according to a federal ruling unsealed Monday in Federal District Court in Los Angeles.
The embattled CEO was accused by the Securities and Exchange Commission, along with Gemstar's former Chief Financial Officer Elsie Leung, in a 2003 civil action of scheming to inflate the company's revenues by $248 million in order to boost its stock price.
In addition to securities fraud, U.S. District Judge Mariana Pfaelzer found Yuen liable for falsifying financial documents and misrepresenting facts to auditors.
The SEC must now propose a penalty to the court. Mike Piazza, the SEC lawyer who argued the case, told Bloomberg News that the agency will seek disgorgement of Yuen's ill-gotten gains, as well as penalties.
Piazza said Yuen earned more than $100 million in compensation and from stock sales while lying to investors to inflate the company's stock price. Among, the scams uncovered by the SEC was recognizing revenue from expired contracts under the premise that the money would be recovered from future settlements, according to Bloomberg.
Monday's ruling is the latest action in the Gemstar-TV Guide case, which also involved a criminal proceeding filed by the U.S. Attorney's Office.
Yuen pleaded guilty in October to destroying company documents and received six months of home detention. He agreed to pay $1 million in charitable donations and a $250,000 fine. Current Gemstar executives protested the agreement in November, seeking a more severe punishment in the criminal case against Yuen.
In January, the federal judge overseeing the case rejected the plea agreement, forcing Yuen to withdraw his guilty plea. That case is still pending.
Meanwhile, Leung agreed last month to pay a $1.4 million settlement to the SEC. She was also barred from serving as an officer or director of a public company and was banned from practicing accounting for the SEC. She did not admit or deny the charges.
Gemstar, which licenses its TV programming guide technology to television companies and set-top box companies, publishes TV Guide magazine.
Shares of Gemstar fell 0.7 percent to settle at $2.96 on Monday.
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