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Ex-SEAL jailed in exec's case

May 06, 2008|E. Scott Reckard | Times Staff Writer

Stephen L. Otten was part of the first Navy SEAL platoon behind enemy lines in Afghanistan after the 9/11 attacks, earning a Navy and Marine Corps Commendation Medal for "courage and expertise while conducting a flawless reconnaissance under the harshest conditions."

On Monday, Otten was sent behind bars for refusing to testify before a federal grand jury investigating allegations of stock manipulation by Newport Beach billionaire Henry T. Nicholas III, the co-founder of Irvine computer chip maker Broadcom Corp.

Otten, 30, who had been both bodyguard and companion of Nicholas' three children, said he felt the same unswerving loyalty to them as he had sworn to his commando comrades. But a federal judge in Santa Ana ruled he had failed to fulfill a higher duty -- to obey a court order -- and sent him to the city jail on civil contempt charges to ponder the possibility that a felony criminal charge of contempt might follow.

"Hopefully, in a short amount of time, that will compel Mr. Otten to do the right thing," U.S. District Judge James V. Selna said.

Otten, who left the Navy in January and resembles the pop star Sting, wore an intense and unchanging frown as the proceedings unfolded.

The courtroom session provided glimpses into two very private arenas: the personal life of Nicholas and the workings of the grand jury examining backdated stock options at Broadcom, whose chips are used in consumer products such as Nintendo Co.'s Wii game console.

Broadcom agreed April 22 to pay $12 million to settle a Securities and Exchange Commission lawsuit alleging that Nicholas and other executives "orchestrated and carried out" a scheme to recruit and retain employees by backdating options from June 1998 through May 2003. Backdating the options made them more valuable to the employees while concealing the expense from shareholders, the suit said.

Nicholas quit as Broadcom's chief executive at about the time the options backdating ended. He checked himself into the Betty Ford Clinic for rehabilitation last month, saying he had been drinking too heavily after the death of his stepfather.

While still a member of the SEALs, Otten began work in late 2006 as a weekend bodyguard and self-described nanny for Nicholas' two sons, now ages 11 and 14, and his daughter, who is 10, during their weekend stays with Nicholas, who is separated from his wife. By all accounts in court, the relationship became intense. Otten became a full-time employee in January.

Otten's attorney, Dean Steward of San Clemente, said his client developed "a mentor, older brother type of relationship" with the Nicholas children. Assistant U.S. Atty. Andrew Stolper, the chief federal prosecutor on the case, acknowledged that Otten "maybe even feels a spiritual camaraderie" with Nicholas.

The first time Otten was called before the grand jury, he refused to testify on self-incrimination grounds. Even after he was promised immunity from prosecution and ordered to testify by Selna he still wouldn't answer questions, Stolper said.

Steward said it would be futile to try to coerce testimony from Otten, who had undergone Navy SEAL training on how to withstand interrogation. During a 12-year Navy career, Otten also helped guard former U.S. Defense Secretary Donald H. Rumsfeld in Africa and was awarded a Bronze Star as a sniper battling Iraqi insurgents in Fallujah, according to Navy documents introduced as evidence to the judge.

"Sitting over at the Santa Ana jail is simply not going to change his mind," Steward said, but the judge ruled against him. Steward said he would file an appeal of the ruling today.

Stolper argued that Otten was betraying part of his own duty as a Navy SEAL -- to obey lawful instructions. Navy Cmdr. Greg Geisen, a spokesman for the Naval Special Warfare Command in Coronado, concurred.

"Military members in general and SEAL team members specifically are expected to follow court orders, whether from a military court or a civilian," Geisen said. "It takes precedence over loyalty to comrades."

Part of the hearing, dealing directly with the grand jury proceedings, was held in closed court. Stolper told the judge in open session that the grand jury would continue to meet through October unless its term is extended, meaning Otten could be jailed until then if the grand jury still needs his testimony.

Selna scheduled a hearing for June 2 into whether to extend Otten's jail time.

Otten, fit and tan with spiky hair, looked relaxed as he surrendered his belt and identification and was led off to jail.

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scott.reckard@latimes.com

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