By Joe Tash
Bill Ruehle spent years working to clear his name after being accused of misleading investors in a high-profile securities fraud case involving his one-time employer, the semi-conductor manufacturer Broadcom.
The book he has written about his legal odyssey was intended to do two things, according to the 71-year-old North County resident: allow him to tell his side of the story for the first time, and also serve as a cautionary tale about the abuse of government power in the hands of prosecutors.
“Be aware,” said Ruehle in an interview. “Never assume that you’re invulnerable.”
Ruehle will give a talk about his self-published book, “Mr. Ruehle, You Are a Free Man: A Broadcom Saga,” at the Sept. 19 meeting of the Rancho Santa Fe Library Guild. A private reception will be held at the library, 17040 Avenida de Acacias, from 6 to 8 p.m. The event will include cocktails and hors d’oeuvres, the author presentation, a question and answer session, and a signed copy of the book. Tickets cost $40.
Ruehle joined Broadcom in 1997, when the company was still private, and had revenue of about $20 million per year and 150 employees. By 2006, he had become chief financial officer, when allegations arose that the company had misled investors by backdating stock options for company employees. He was indicted in 2008.
“It’s something you never imagine and it turns your world upside down,” Ruehle said.
The website Investopedia defines backdating as “the process of granting an option that is dated prior to the date that the company granted that option. In this way, the exercise price of the granted option can be set at a lower price than that of the company’s stock at the granting date.”
Critics of the practice contend it allows company employees to buy their stock at a lower price than its value on the date when the option is granted, so they can make a profit by selling the stock at the subsequent, higher price.
Ruehle said the charges against him and his fellow executives stemmed from allegations they were understating expenses, and overstating profits, through the backdating scheme.
However, Ruehle said, the charges were totally unfounded.
“My position is we never did the backdating we were accused of,” said Ruehle.
Ruehle’s trial was held in late 2009 in Santa Ana before U.S. District Judge Cormac J. Carney. According to news accounts of the trial, Carney dismissed the case against Ruehle and his co-defendant, Broadcom co-founder Henry T. Nicholas III, in December of that year.
In dismissing the case before it went to the jury, the judge noted misconduct by a prosecutor, who allegedly tried to intimidate witnesses and defendants.
More significantly, said Ruehle, the judge also ruled there was not enough evidence to give the case to the jury. The judge’s decision is equivalent to an acquittal on the charges, which cannot be brought again because of the Constitutional prohibition against double jeopardy.
Ruehle said it was devastating to be charged with securities fraud after a long business career in which he had been the person that others relied on to provide the truth. He passed on offers of plea bargains, opting to fight to clear his name.
“I was determined not to let the government take my life away,” he said.
The odds were against him from the start, Ruehle said, because less than 1 percent of people indicted for “white collar” crimes are ultimately acquitted.
As to his decision to write the book, he said, “I wanted my story to get out.” Although he had wanted to testify at his trial, he and his attorneys decided his testimony was not needed. Two fellow company executives told the defense’s story after being granted immunity from prosecution.
These days, Ruehle and his wife, Julie, run Ruehle CFO Advisory Service, which advises early stage companies on how to prepare for an initial public stock offering.
The notoriety gained from his criminal trial has both helped and hurt the business, Ruehle said. Some younger entrepreneurs admire that he stood up to the government and won, while other more established executives are put off by the stigma of his indictment and trial.
But he still enjoys the challenge of guiding a start-up enterprise.
“I really enjoy getting companies going, it gets in your blood,” he said.
The book “Mr. Ruehle, You Are a Free Man: A Broadcom Saga” is available at www.Amazon.com.