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Los Angeles-The former chief executive of Gemstar-TV Guide International Inc. may face jail time if a federal judge in Los Angeles rejects his plea agreement this week. Henry Yuen, who was ousted in 2002 after Gemstar lost almost $3 billion in market capitalization due to accounting restatements, pleaded guilty in October to destroying computer files during a separate investigation by the U.S. Securities and Exchange Commission. As part of the deal, he agreed to pay a $250,000 fine and to donate $1 million to charity while serving two years’ probation and six months of home detention. Prosecutors and Yuen’s lawyers have said the sentence fits his crime of obstruction of justice, reiterating that he has not been charged with securities fraud. ‘Travesty of justice’ But lawyers for Gemstar and the SEC have expressed concern about the plea agreement, with Gemstar lawyers calling it a “travesty of justice.” The company also said it spent $100 million in legal fees and lawsuit settlements because of Yuen. U.S. District Judge John Walter is expected to reject the agreement when he issues a final ruling on Yuen’s sentence on Jan. 23. In December, Walter issued a tentative ruling criticizing the sentence, saying that it “sends the wrong message to corporate America,” and is “wholly inappropriate,” according to court transcripts. With a plea deal scrapped, federal prosecutors could add charges against Yuen or drop the case altogether. Yuen, who would have the option to withdraw from the agreement, may face a new sentence from the judge or a potential jury in the near future. That would appease lawyers for the SEC and Gemstar. “We believe the original plea agreement was not appropriate for the damage that Mr. Yuen has caused the company and its shareholders,” said Richard Stone, a partner at Washington’s Hogan & Hartson who represents Los Angeles-based Gemstar. Thom Mrozek, a spokesman for the U.S. attorney’s office in Los Angeles, said, “we’ve encouraged the court to accept the plea agreement filed last year.” Mike Piazza, trial counsel at the SEC’s Pacific regional office, said the SEC’s reluctance to accept the plea agreement is “unusual.” “We put tremendous amounts of resources on the case, 10 investigative attorneys, crossed over 2 1/2 years and settled with four of the five individual defendants,” Piazza said. “That tells you how the SEC feels about the case. We put a lot of resources into it.” Yuen’s attorney, Stanley Arkin, a partner at New York-based Arkin Kaplan, expressed frustration about the recent changes in the case. “We don’t know what’s going to happen here, and the fact is we’re searching.” The SEC has filed a civil suit against Yuen and Elsie Leung, the company’s former chief financial officer, alleging that they overstated company revenue to increase the company’s stock price. Leung settled the claims. The SEC wrapped up its civil case against Yuen in trial last month and is waiting for a judge’s final decision.

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