A federal judge has ruled that the former chairman and chief executive of Gemstar-TV Guide International Inc. committed securities fraud at the company from 1999 to 2002.
In an unsealed ruling, the judge said that a preponderance of evidence showed that Henry Yuen withheld material information from Gemstar's auditors and investors -- mostly by inflating revenue to meet financial targets.
The judge had sealed Yuen's deposition, testimony and her findings to protect his rights in a separate criminal case. In that case, Yuen faces charges that he destroyed evidence the Securities and Exchange Commission had subpoenaed in the civil case. The judge's findings were unsealed after a legal challenge mounted by two news organizations.
The SEC will submit a proposed financial penalty in the civil case at a hearing April 3, though Yuen can still appeal the ruling. Yuen had agreed to settle the case months ago, but a squabble between the SEC and the Department of Justice on whether or not the deal was too lenient led to its being scrapped.
Gemstar's businesses include TV Guide magazine and the licensing of electronic television guides for set-top boxes . Both Yuen and chief financial officer Elsie Leung were forced out in late 2002 after the company was discovered to have inflated advertising sales since 1999. In 2004, Gemstar agreed to pay a $10 million civil penalty to settle charges that it had overstated revenues, and both Gemstar and auditor KPMG settled a class-action lawsuit brought by company shareholders for $67.5 million and $25 million, respectively.
