The former chairman of Gemstar-TV Guide International Inc. will plead guilty to obstructing a Securities and Exchange Commision investigation into accounting irregularities at the company.
Following an investigation by the Federal Bureau of Investigation, the U.S. Attorney's Office in Los Angeles said that, under terms of the deal, Henry C. Yuen will serve six months of home detention over two years of probation. He will also pay a $250,000 fine and be required to contribute $1 million to charities representing low-income victims of fraud. Gemstar settled with the SEC last year for $10 million.
Gemstar's businesses include the TV Guide magazine and electronics licensing. Both Yuen and the company's chief financial officer, Elsie Leung, were forced out in late 2002 after the company was discovered to have inflated advertising sales by nearly $250 million since 1999.
According to prosecutors, Yuen received a subpoena in the fall of 2002 to turn over documents stored on his Gemstar office computer, but instead used a program to delete them on the day before he was scheduled to testify before the SEC.
Earlier this year, under the Sarbanes-Oxley Act, the SEC won a court judgment to freeze $29.5 million in severance pay that Yuen was to receive after he left Gemstar. The SEC is moving forward to prosecute Yuen and Leung on civil fraud charges in December. Both of the former executives said that they relied on the opinions of auditor KPMG in reporting financial information.
Both KPMG and Gemstar settled a class-action lawsuit brought by company shareholders for $25 million and $67.5 million, respectively.
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