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A former high-tech executive has been sentenced to prison for his role in a financial scandal at Milpitas-based California Micro Devices Corp. Chan Desaigoudar, the former chief executive officer of the semiconductor maker, was sentenced to 2 1/2 years at a minimum security prison after pleading guilty to one count of insider trading earlier this year. The plea followed a 1998 trial in which Desaigoudar was convicted of insider trading, conspiracy and securities fraud. The conviction was overturned by the 9th U.S. Circuit Court of Appeals, which ruled that his defense attorney was hampered by a joint defense agreement. U.S. District Judge Vaughn Walker sentenced Desaigoudar to three years following that trial. Under terms of his plea deal, the fraud charges against Desaigoudar were dismissed, a move that managed to shorten his sentence by only six months. On Friday, Walker said he had abbreviated the 1998 sentence because he believes the loss calculations for securities fraud charges are flawed. Now that that charge has been dismissed, it is no longer an issue, he said. Walker called Desaigoudar “a remarkable man” who has used his wealth to help those less fortunate. However, he also said those in positions of power, like CEOs, have “an obligation that, I think, goes beyond ordinary obligations, and that is to set an example by his own conduct that is a beacon for others.” “If they abuse that responsibility, they are subject to the punishment of the law,” Walker said. Former Chief Financial Officer Steven Henke struck a deal with prosecutors earlier this year. The Securities and Exchange Commission also has a pending case against Desaigoudar. Desaigoudar was represented by San Francisco solo William Osterhoudt. Assistant U.S. Attorney Jeffrey Bornstein prosecuted the case. Cal Micro improperly reported revenues and later covered them up, the government alleged in the suit. Indictments were handed down in 1997. “I am truly sorry that this has happened. It should not have happened,” Desaigoudar told the court Friday. “I built this company from nothing, and until I was locked out Dec. 1, 1994, I gave it my all.” Walker also fined Desaigoudar $60,000 and ordered him to pay $573,000 in restitution to a class of shareholders who sued the company. That suit has been settled and the claims released, however, so it’s unclear how the money will be distributed. In an intriguing development, Cal Micro is also seeking restitution from Desaigoudar, who is as much the architect of the company as he is the man responsible for attaching scandal to its name. Walker heard arguments on the matter Friday and will issue a written order within a few weeks.

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