In charges stemming from a 2001 shareholders suit, a federal judge found this week that Larry Ellison deliberately withheld evidence that would have shown his awareness of problems surrounding Oracle's finances and its Suite 11i software.

Oracle CEO Larry Ellison has been found by a federal judge to have destroyed e-mails and withheld recorded interviews that could have been used against him. This in connection with a shareholders' suit charging Ellison with making false financial statements.

US District Court Judge Susan Y. Illston ruled on Tuesday that Ellison's e-mails, along with a journalist's recordings of interviews with Ellison, had been willfully withheld from lawyers for the shareholders who sued him.

Oracle shareholders launched the suit against Ellison -- the fourth richest person in the US -- in March 2001, alleging he lied in financial statements contained in the company's 2001 second quarter financial results. Prosecutors contend that Ellison knew about problems related to the company's finances, as well as its Oracle Suite 11i software product, and that he intentionally sold $900 million in Oracle stock before disclosing the difficulties publicly.

Judge Illston ruled in San Francisco yesterday that the materials allegedly destroyed or withheld -- which included recorded interviews for a book about Ellison entitled Softwar: An Intimate Portrait of Larry Ellison and Oracle -- were potentially relevant to shareholders' charges.

"The court believes it is appropriate to infer that the e-mails and Softwar-related materials would demonstrate Ellison's knowledge of, among other things, problems with the Suite 11i, the effects of the economy on Oracle's business and problems with defendant's [Ellison's] forecasting models," she wrote.

In the shareholder suit, Ellison did relinquish 15 of his own e-mails. Another 1,650 e-mails from Ellison were turned over from the files of other Oracle employees. However, both Ellison and Oracle had a duty to preserve e-mails after the shareholders' suit was filed, and many e-mails from after March of 2001 were missing, Illston said.

The shareholders had also requested 135 hours of recorded interviews from March, 2001 to August, 2002 for Softwar. The author of the book, Matthew Symonds, allegedly destroyed the digital recordings by telling a computer repair shop to throw away the notebook PC on which the interview transcripts were stored. Ellison then turned over 200 pages of written transcripts from 2002, but he did not turn over any transcripts from 2001, according to the judge's decision.

A trial in the case against Ellison, brought by the Nursing Home Pension Fund, is slated to start on March 30, 2009.

Illston ruled this week that, as a penalty to Ellison, jurors in the case will be instructed to assume that Ellison knew about problems related to Oracle's finances and Suite 11i. The judge also said she will take this assumed knowledge into account when she makes decisions about investors' claims for damages and Oracle's attempts to get the case dismissed.