Broadcom co-founder indicted on drug charges, backdating

Sue Marek — Fri, 06 Jun 2008 11:01:25 -0400

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

Related stories:
SEC: Broadcom officials back-dated stock options.
FBI: Comverse execs gain $8M from backdating

Stock Option Backdating

Broadcom co-founder indicted on drug charges, backdating