Federal prosecutors may have charged Broadcom co-founder Henry T. Nicholas III in one of the largest stock-option backdating cases in U.S. history, but it was allegations that the billionaire drugged his business cohorts, hired prostitutes and maintained a drug warehouse that grabbed headlines. A pair of indictments unsealed Thursday charge the 48-year-old with conspiracy and securities fraud in an alleged scheme to backdate stock options that ultimately forced Broadcom to write down $2.2 billion in profits last year. But prosecutors also detailed a litany of drug charges that apparently came as a surprise to Nicholas and his attorneys.
The charges threaten to ground a high-flying lifestyle that prosecutors say featured the former CEO jetting around the world in his two private planes, building a secret lair under his house and hiring strippers to party at a private warehouse stocked with cocaine, methamphetamine and ecstasy.
The 18-page indictment on drug charges alleges that Nicholas kept four properties in Orange County and Las Vegas, including a warehouse in Laguna Niguel, Calif., where he stashed and distributed cocaine, methamphetamine and ecstasy. The court documents also claim Nicholas hired prostitutes and escorts for himself, his employees and customers and conspired to get illegal prescriptions for drugs such as Valium.
In 2001, Nicholas smoked so much marijuana during a flight on a private jet between Orange County and Las Vegas that the pilot had to put on an oxygen mask, the indictment states. At a July 1999 Woodstock concert in Rome, N.Y., Nicholas gave a technology executive ecstasy without the executive's knowledge, the indictment states. Nicholas also allegedly spiked a technology executive's drink with ecstacy in New Orleans in early 2000.
That suit was filed by Nicholas' former bodyguard and personal assistant, Kenji Kato. A second lawsuit was filed last year by a construction crew that claimed they were hired to build an underground lair for Nicholas where he could indulge in sex with prostitutes and drug use. The workers claimed Nicholas failed to pay them millions of dollars and used intimidation and death threats to prevent them from leaving the project, which was kept secret from Nicholas' wife and city inspectors.
Nicholas served as CEO and president from Broadcom's inception until he resigned in 2003. At the time, he said he stepped down to try to repair his relationship with his wife. Ruehle joined the company in 1997 as vice president and chief financial officer and retired in 2006.
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