Broadcom co-founder and former CEO Henry T. Nicholas III has been indicted for possession and distribution of drugs, and backdating stock options, a scheme which ultimately caused the company to write down $2.2 billion in profits last year.
The indictment alleges that the Nicholas drugged business executives and Broadcom clients, hired prostitutes and maintained a drug warehouse. In addition, Nicholas, along with former Broadcom CFO William Ruehle, was indicted on charges relating to stock-option backdating. According to the indictment, the back-dating schemes allegedly involved offering employees the option to buy stock at a future price that failed to recognise its true value.
If convicted, the four narcotics charges carry a maximum penalty of 20 years in jail. The charges of stock-option backdating could add up to a sentence of 340 years for Nicholas and 370 years for Ruehle.
For more:
- see this AP story [1]
Related stories:
SEC: Broadcom [2] officials back-dated stock options.
FBI: Comverse execs gain $8M from backdating [3]
Links:
[1] http://biz.yahoo.com/ap/080606/broadcom_indictment.html?.v=6
[2] http://www.fiercetelecom.com/story/sec-broadcom-officials-back-dated-stock-options/2008-05-15
[3] http://www.fiercewireless.com/story/fbi-comverse-execs-gain-8m-from-backdating/2006-08-10