Billionaire on trial, charges involve weed, ecstasy, meth, coke, hookers...

[lulz]

This dude should be a role model for billionaires everywhere.

A Californian technology billionaire has been accused of feeding ecstasy to unwitting business associates, hosting orgies at a private drugs warehouse and building a secret party lair under his mansion that even his wife knew nothing about.

The allegations about the extraordinary lifestyle of Henry T. Nicholas III, founder of the chip company Broadcom, came in an indictment unsealed at a California court yesterday.

The 48-year-old businessman was already facing securities fraud and conspiracy charges over an alleged scheme to backdate stock options that forced Broadcom to write down $2.2 billion in profits last year.

But prosecutors also indicted him on a string of drugs charges that apparently came as a surprise both to Mr Nicholas and his lawyers. “It’s a kitchen-sink attack on Dr Nicholas. They’re trying to throw everything at him from eight years ago,” Gregory Craig, his defence lawyer, complained.

Mr Nicholas is worth an estimated $2.3 billion and was listed at 165 on the Forbes rich list last year. He made his money from the manufacture of microchips for mobile phones and broadband internet devices.

The 18-page indictment on drug charges alleges that Mr Nicholas kept four properties in Orange County and Las Vegas, including a warehouse in Laguna Niguel where he stashed and distributed cocaine, crystal meth and ecstasy. He later remodelled the warehouse with private rooms and furnished it with art and high-end electronics.

The court documents also claim that Mr Nicholas hired prostitutes and escorts for himself, his employees and customers and conspired to get illegal prescriptions for drugs such as Valium.

In 2001, according to one count on the indictment, Mr 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. At a July 1999 Woodstock concert in Rome, New York, he is alleged to have given ecstasy to an unwitting technology executive. He is also accused of having spiked a technology executive’s drink with ecstasy in New Orleans in early 2000.

Mr Nicholas also required his unnamed co-conspirators to provide detailed invoices for drugs they sold to him, and used code names such as “party favours” and “refreshments” to conceal what was being sold, prosecutors claimed.

At a court hearing in Santa Ana, US Magistrate Arthur Nakazato set Mr Nicholas’s bail at a comparatively modest $3.3 million. He also ordered random weapons searches and drug tests by the government, home detention, electronic monitoring and the disabling of his two private planes.

Mr Nicholas, in handcuffs and wearing gray slacks and a white shirt with no tie or belt, was reported to have nodded vigorously when asked if he agreed to the conditions of release.

The judge said that he was concerned that Mr Nicholas’s extreme wealth could allow him to flee at any moment and his Newport Coast home, valued at $15 million to $18 million, would be no impediment to flight for “one of the wealthiest men in the world”.

Mr Nakazato also said he was bothered by government allegations that Mr Nicholas had threatened and hit a grand jury witness last year during an argument on a private jet. He told him: “If you flee, I will detain you and I will order an arrest warrant and I’ll have the marshals and the FBI going on a hunt for you – and when they bring you back, I’m not going to show much mercy.”

An arraignment hearing was set for June 16 and Mr Nicholas did not enter a plea.

Also indicted on the stock-option backdating was William J Ruehle, Broadcom’s former chief financial officer. Mr Ruehle, 66, was released on $2.6 million bail and surrendered his passport, although he will be allowed to take three international trips that were already planned.

The drugs charges faced by Mr Nicholas carry a maximum combined sentence of 20 years in prison, although he could face a theoretical 340 years in prison on the fraud and conspiracy charges.

Backdating stock options, which often are granted as hiring and retention incentives for executives, is legal but companies have run into trouble by failing to account for the true cost of the exercise, thereby inflating their income and stock price.

Mr Nicholas served as CEO and president of Broadcom from its inception in 1991 until his resignation in 2003.

http://www.timesonline.co.uk/tol/new...cle4080034.ece

That "secret party lair" in his mansion, that the article mentioned, was some kind of club that he secretly built in his basement. It was hidden and you could only get into it using hidden doors and secret switches.

Hells yes.

Reputation Comments on this post:

Interesting story, thanks.

[Heretic.Ape.]

What can I say, I like the no-good bastard

[radiometer]

Oh yeah, gotta love someone who drugs employees without their knowledge or consent.

[lulz]

Yeah if that's true, not cool. But there's probably more to the story.

[radiometer]

Maybe I'm weird. I think this guy sounds like Larry Ellison on drugs - a total asshole with no regard for anything but himself. Maybe you have to live in Silicon Valley to know just how disgustingly self-centered and out of touch with reality these types are.

Given that the company had to restate earnings to the tune of billions of dollars, let's not forget that his drugs were likely paid for by ripping people off, especially employees whose stock options crumbled to dust in front of their very eyes.

[lulz]

Larry Ellison sounds kind of surreal.

"What's the difference between God and Larry Elison?

God doesn't think he's Larry Elison."

[Joe Duffy]

Didn’t this guy give away a lot of money to charities?

[zera]

Originally Posted by radiometer

Maybe I'm weird. I think this guy sounds like Larry Ellison on drugs - a total asshole with no regard for anything but himself. Maybe you have to live in Silicon Valley to know just how disgustingly self-centered and out of touch with reality these types are.

Given that the company had to restate earnings to the tune of billions of dollars, let's not forget that his drugs were likely paid for by ripping people off, especially employees whose stock options crumbled to dust in front of their very eyes.

Backdating doesn't rip off employees. Backdating refers to the practice of lying about the date when you are granted options. So for example say the stock is at $50 at the end of quarter one, and you were really granted the option at the end of quarter two when the stock is at $70. Say the option has a strike of $100 (so the employee has the right to buy the stock at $100 at some future date) If you disclose that options were granted in the earlier period then it makes it seem like a "cheaper" cost of doing business because the stock has further to rise before the option's in the money.

The practice was really pervasive throughout pretty much every tech company during the boom, there's irrefutable evidence that Steve Jobs did it too. If anything the employees benefit because the options they have vested are probably being backdated too. Its the shareholders that get screwed over. But the fact that this guy is being prosecuted while every other major tech executive isn't demonstrates to me that there's some political agenda at play here.

[AquafinaOrbit]

Mr 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.

-
-OP

Haha.

[radiometer]

Originally Posted by zera

Backdating doesn't rip off employees...If anything the employees benefit because the options they have vested are probably being backdated too. Its the shareholders that get screwed over.

Thanks for clarifying that.

[Expat98]

Broadcom founder allegedly shown taking illegal drugs on YouTube

June 9, 2008

Here’s a no-win situation for an attorney: What do you do when a your client, the founder and former CEO of a billion-dollar public company, is supposedly being shown on YouTube using illegal drugs?

According to a motion filed by federal prosecutors on Thursday, the quandary arose last summer when such videos were posted of Henry T. Nicholas, III, the co-founder and former CEO of Broadcom (BRCM), the high-profile, fabless semiconductor company based in Irvine, California.

(Last Thursday Nicholas pleaded not guilty to two federal indictments, one charging options backdating and the other conspiracy to distribute drugs, including MDMA (ecstacy), methamphetamine, and cocaine.)

In August 2007 Nicholas attorney Susan Szabo of Munger Tolles & Olson wrote e-mails and faxes to YouTube and parent Google (GOOG) demanding they take down a video of Nicholas, which, she said, invaded his privacy.

A YouTube support rep e-mailed Szabo back explaining that the company couldn’t process a privacy complaint “based on what a video ‘purports’ to portray,” so he invited her to confirm that the video really did show her client in a private setting without his consent.

Szabo complied: “I can confirm that the video portrays my client and that the video was taken surreptitiously in his bedroom, without his knowledge and consent, and that any distribution of the video is without his consent.”

Now, in a motion asking that Nicholas be detained pending his trial on the two indictments, the government cites the video - which, it claims, shows Nicholas using drugs at a time when he knew the government was investigating him and when he was publicly denying drug use to the media - as tending to show that Nicholas presents a risk to the community and a flight risk. Prosecutors write: “There can be no doubt it was defendant in the video as his attorneys sent an e-mail and letter to YouTube confirming that the person in the video using drugs is, in fact, defendant.” (The judge ultimately ordered certain “home detention” measures for Nicholas.)

An e-mail to attorney Szabo was not immediately returned. Nicholas’s criminal defense attorney, Brendan Sullivan, wrote: “I adhere to a policy that I should not discuss matters in litigation.”

The government’s 18-page detention motion, with 100 pages of appended exhibits, also levels a variety of other unflattering accusations beyond those already contained in the indictments. During a June 2007 flight on one of his private jets, for instance, Nicholas allegedly accused a “longtime friend, personal attorney, and employee” of wearing a “wire”; threatened to “chase him to the ends of the earth” if the friend “screwed” him; and then struck the friend in the face, causing him to fall to the ground.

The papers also allege that in November 2007 Nicholas, while driving with his son, crashed his black Lamborghini into a lamp post while returning from a Shake Shack. He switched cars with a security staffer in his convoy and then left the scene while the staffer waited for the police and took the rap. Through an attorney, Nicholas later admitted to local police that he’d been driving the Lamborghini, but claimed that the security staffer had suggested Nicholas drive home for “security reasons,” and that Nicholas had never intended that the staffer take responsibility for the crash. (The staffer, according to prosecutors, has refused to testify about the incident notwithstanding an immunity order, and is currently incarcerated on contempt charges.)

Nicholas stepped down as Broadcom’s CEO and co-chairman in 2003, explaining in a statement that he wanted “to attend to serious family matters.”


http://legalpad.blogs.fortune.cnn.co...gs-on-youtube/