A federal grand jury indicted Henry
T. Nicholas III, the CEO of Irvine, California-based Broadcom Corporation, on charges of fraud and violating federal narcotics laws
last Thursday. The grand jury accused
him of improperly backdating employee stock options, slipping the club-drug
MDMA (a.k.a. Ecstasy) into the drinks of technology executives and
representatives of the company’s clients, and coercing employees with death
threats and monetary settlements in order to conceal his activities.
Totaling 21 counts, the indictments
listed in the 18-page indictment could put Nicholas behind bars for up to 370
years if found guilty on all charges.
Excerpts, provided by the AP, tell of one
episode where Nicholas forced pilots in his private jet to use an oxygen mask
in a flight between Orange County and Los Angeles, due to marijuana smoke that
wafted into the cockpit during flight.
Other charges detail episodes
involving the use and distribution of cocaine and methamphetamines, the
maintenance and renovation of a warehouse used for drugs and prostitutes, and a
commission of a complex “warren” of tunnels dug under his Laguna Hills,
California estate that were to become an underground “sex lair.” Nicholas kept
the project secret, hiding it from both his family and city officials.
Nicholas was also accused of making
his drug suppliers invoice him for purchases, listing drugs under codenames
like “party favors” or “refreshments,” and that he conspired with unnamed
associates to acquire illegal prescriptions for himself, his employees, and his
customers.
Despite surrendering himself to the
FBI Thursday morning, Nicholas’ attorney said he would “contest [the] charges
vigorously,” noting that Nicholas is “confident that he will be fully
vindicated.”
The indictment was shared by both
Nicholas and Broadcom co-founder William J. Ruehle, who served as the public
company’s Chief Financial Officer. Ruehle attributes the improperly-dated stock
options to “accounting glitches” and acknowledged no wrongdoing.
“This is a classic case of
government overreaching,” said Ruehle’s lawyer, Richard Marmaro, in a
statement. “The government's indictment unsuccessfully attempts to transform a
company's technical accounting error into criminal conduct.”
Ruehle “looks forward to the
opportunity to clear his good name in a court of law,” said Marmaro.
An afternoon bail hearing freed
Nicholas on a $3.4 million bail, secured by property pledged by Nicholas’
family and friends.
Nicholas’ tenure at Broadcom ended
in 2003, when he resigned his position as CEO in order to “repair his
marriage.” Ruehle retired from the company in 2006.
The Los Angeles Times notes
that the backdating charges mirror complaints similar to an SEC lawsuit filed
against the duo and a handful of their associates last month.
