SAN JOSE, Calif. Gerald Hsu stepped down from his position as president and chief executive of Avanti Corp. late Wednesday night (July 25), citing a recent heart attack. The move came just hours after final sentencing in the Avanti/Cadence Design Systems Inc. software theft case in which Hsu was convicted of a misdemeanor and fined $2.7 million, five other Avanti employees were sentenced to jail time and the company was fined $195 million.
Paul Lo, Avanti's chief operating officer, was elected president by the company's board, leaving the position of chief executive vacant. Hsu will continue to serve as chairman of Avanti's board and the company's chief strategist, according to an Avanti statement.
Avanti Corp. must pay $195,399,855 in restitution to Cadence Design Systems Inc., and Avanti co-founder Stephen Wuu was taken away in handcuffs by the Santa Clara County sherriff's department to serve two years in prison, as the high-profile People vs. Avanti source-code-theft case reached its conclusion in San Jose Wednesday afternoon (July 25).
Wuu received the harshest sentence of all the Avanti defendants, because he took the Symbad database code from Cadence Design Systems in 1991 while employed with that company. Wuu then modified small parts of the code to create the database technology for his new company ArcSys, which later became Avanti.
Wuu is headed to San Quentin State Prison and will receive three years of probation in addition to $2.7 million in fines, per Judge Conrad Rushing's order, issued Wednesday. Rushing recommended, however, that Wuu be placed in a restricted security area, away from violent offenders, and suggested he be put to work helping the state corrections department with computer problems.
Other Avanti defendants were sentenced for lesser charges, including minor acts of theft, conspiracy and securities fraud.
Avanti's chairman and chief executive, Gerald Hsu, will serve no jail time and has already paid his $2.7 million fine. Rushing reduced Hsu's sentences to misdemeanors.
Avanti co-founder Yuh-Zen Liao will spend one year in county jail and serve three years of probation. He will also have to pay $2.7 million in fines. He is eligible for work furlough.
Another Avanti co-founder, Eric Cho, will pay $108,000 in fines and spend one year in jail. He is also available for work furlough.
Leigh Huang, at one time Avanti's director of business operations, was not sentenced to jail time and will be on probation for three years. Huang will also have to pay a fine of $108,000.
Eric Cheng received 364 days in county jail, work furlough, and will have to pay a fine of $27,000.
Charges against Mike Tsai, another former Cadence employee and Avanti co-founder who was Avanti's first chief executive, were dismissed.
Mitch Igusa, who pleaded no contest late last month to charges of stealing source code from Cadence Design Systems for use by Avanti Corp., was sentenced in late June to one year in county jail. Igusa will be eligible to participate in a work-release program while serving his one-year sentence.
It was also revealed Wednesday that Wuu, Cheng and Liou, as of Wednesday, are no longer employees of Avanti Corp.
It was also revealed that a class-action suit has been filed by law firm Milburg and Weiss on behalf of Avanti shareholders against Avanti's board of directors for paying the fines and legal fees of all defendants in the case.
One Avanti defendant's attorney suggested that the class-action suit may result in the defendants paying their fines and attorneys out of their own pockets.
"We are very pleased with the result of the of this criminal case," said Julius Finkelstein, deputy district attorney for Santa Clara County. "Judge Rushing imposed the maximum penalty. The court's sentencing recognizes the seriousness of trade secret theft."
Avanti's new president, Lo, has served as the company's chief operating officer since Sept. 2000. He directed the development of many of Avanti's products, including the Apollo place and route tool and Hercules-II, a physical verification tool. In addition, he was responsible for building up the company's research and development center in Taiwan.
Lo received his PhD in electrical engineering from the University of Southern California, and graduated with a bachelor of science degree in electrical engineering from the National Taiwan University. He joined Avanti in 1995 from Quickturn Design Systems, where he worked on HDL-based logic emulation products.