Legal News

Up in Smoke! Broadcom Co-Founder Indicted on Drug, Fraud Charges

By Dan Slater

Ah, the beauty of the legal beat, always challenging our expectations. Just when we thought we’d covered the strangest backdating case, another, stranger still, rises to the surface. The feds unsealed two indictment today charging Broadcom co-founder Henry T. Nicholas III with conspiracy and securities fraud related to options backdating, as well as numerous drug charges. (See this AP story.)

Huh? The indictments charge Nicholas with some two dozen counts, including conspiracy, securities fraud, false certification of financial reports, filing false statements with the SEC, wire fraud and conspiracy to distribute and acquire controlled substances.

You can click here for the backdating indictment. But for a change, we’ll focus on the drug indictment, which includes the following allegations:

• Beginning in 1999, and continuing through 2005, Nicholas and other co-conspirators conspired to distribute MDMA (ecstasy), cocaine and methamphetamine; and, to maintain places, namely, the Rodeo Residence, the Warehouse, the Telescope House, and the Turnberry Condo, for the purpose of distributing and using controlled substances.
• Nicholas directed co-conspirators and associates to invoice him for controlled substances using various code words, including “supplies,” “party favors,” “refreshments” and “E” (ecstasy).
• Nicholas spiked the drinks of others with MDMA (ecstasy) without their knowledge, including the drinks of technology executives and representatives who worked for Broadcom’s customers.
• Nicholas hired prostitutes and escorts for himself and customers, representatives, and associates of Broadcom.
• In or around 2001, Nicholas distributed and used controlled substances during a flight on a private plane between Orange County and Las Vegas, causing marijuana smoke and fumes to enter the cockpit and requiring the pilot flying the plane to put on an oxygen mask.

Just six weeks ago, the WSJ editorial page wrote that Nicholas has made himself a figure to excite a jury and the media. “With his NBA-sized physique, he’s one of techdom’s most conspicuous billionaires, an eccentric genius and widely known (thanks to this newspaper) for having been accused in a disgruntled employee’s lawsuit of patronizing prostitutes and drug dealers.”

Lawyers did not immediately return calls from the Journal. But in April, according to the AP, an attorney for Nicholas said he had entered an alcohol rehabilitation program.

Full post as published by Law Blog - WSJ.com on June 05, 2008 (boomark / email).