Criminal Justice

Ex-Broadcom CEO Indicted in Options Backdating—and Drug—Case

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Federal indictments unsealed today may shed some light on why billionaire Henry Nicholas III reportedly was seen hanging out in a California courthouse this week and last week, awaiting possible charges in the hope of reducing potential bail restrictions.

In addition to being charged with conspiracy and securities fraud concerning his alleged role in stock options backdating as the former CEO and co-founder of Broadcom, Nicholas also has been charged with an alleged conspiracy to distribute cocaine, MDMA (ecstasy) and methamphetamine between 1999 and 2005, reports the Wall Street Journal Law Blog.

“The indictments, returned by a federal grand jury, charged Nicholas with a total of 25 counts, including conspiracy, securities fraud, false certification of financial reports, filing false statements with the U.S. Securities and Exchange Commission, wire fraud and conspiracy to distribute and acquire controlled substances,” recounts the Associated Press.

Among other allegations made in the drug indictment (PDF provided by Law Blog), Nicholas is claimed to have spiked the drinks of technology executives and Broadcom customer representatives with ecstasy without their knowledge. He is also claimed to have “hired prostitutes and escorts for himself and customers, representatives, and associates of Broadcom,” the WSJ blog notes.

Plus, Nicholas is alleged to have distributed and used controlled substances on a private plane around 2001, forcing the pilot to put on an oxygen mask to escape cockpit drug fumes.

Nicholas is also accused of “maintaining homes and commercial properties in Orange County and Las Vegas for the ‘purpose of using and distributing controlled substances’ he sometimes referred to as ‘party favors,’ ” reports the Los Angeles Times. In one of the homes, he is alleged to have “constructed a warren of tunnels and underground rooms, including one that contractors alleged was intended to become a secret ‘sex lair.’ “

In something of an anticlimax, Law Blog also provides a copy of the backdating indictment (PDF).

Nicholas didn’t respond to requests for comment from the WSJ. However, a lawyer for Nicholas said in April that he had entered an alcohol treatment program, according to AP.

Additional coverage:

ABAJournal.com: “Founders & Gen’l Counsel Sued By SEC in Broadcom Options Backdating Case”

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