Co-founder of Broadcom faces drug, securities charges

Broadcom co-founder Henry T. Nicholas III was in custody on charges that he slipped ecstasy into the drinks of technology executives, maintained a warehouse to store cocaine and tried to conceal his illegal conduct with bribes and death threats.

An Associated Press report said the billionaire also is accused of committing conspiracy, securities fraud and other violations while he led the Irvine-based computer chip company.

A pair of indictments unsealed Thursday, one addressing the drug charges and the other allegations related to improper handling of backdated stock options, paint a bizarre picture, the Associated Press report said.

A successful entrepreneur, Nicholas is accused of using much of his fortune to fund drug parties in airplanes and luxury homes and to build a secret tunnel and room beneath his mansion in Laguna Hills.

Much of that allegedly happened at the same time as the alleged backdating scheme, which forced Broadcom to write down its profits by €1.4 billion (US$2.2 billion) in January 2007.
That is believed to be the largest-ever accounting restatement related to improperly accounting for backdated options.

Broadcom's former chief financial officer, William J. Ruehle, also was named in the backdating indictment and faces conspiracy, securities fraud and other charges. He is not charged with drug violations.

Nicholas, 48, turned himself in to the FBI on Thursday, said Thom Mrozek, spokesman for the US attorney.

Nicholas and Ruehle, 66, were scheduled to make their first court appearances later in the day.