Broadcom Billionaire Henry Nicholas Indicted on Cocaine and Stock Back-Dating Charges


Practically everybody partied too hard during the 1990s. But Broadcom founder, and billionaire, Henry Nicholas, partied harder than most. Two indictments came down today on Nicholas. One for back-dating stock options that cost the company $2.2 billion in accounting charges last year, and the other for, well, partying too hard (the indictment mentions cocaine, Ecstacy, and prostitutes). The LA Times reports:

A federal grand jury has indicted Henry T. Nicholas III on fraud charges, according to documents unsealed today that also accuse the Orange County billionaire of supplying customers with prostitutes and drugs and slipping Ecstacy into the drinks of unwitting technology executives.

“Defendant Nicholas spiked the drinks of others with MDMA (ecstacy) without their knowledge, including . . . the drinks of technology executives and representatives who worked for Broadcom’s customers,” the indictment alleged without identifying the victims.

On a flight from Orange County to Las Vegas aboard a private plane, the government alleges, Nicholas used and distributed drugs, “causing marijuana smoke to enter the cockpit and requiring the pilot flying the plane to put on an oxygen mask.”

Nicholas, who stepped down as Broadcom’s chief executive in 2003, surrendered to the FBI this morning, said Pete Norell, a supervising FBI special agent in Santa Ana

Nicholas is alleged to have used death threats and payoffs to conceal his “unlawful conduct.” In June 2002, he reached a $1-million “settlement agreement” with an unnamed Broadcom employee who knew about his alleged illegal drug activity, according to the indictment.

It lists three properties described in previous Times reports about Nicholas’ alleged indulgences in drugs and prostitutes:

* An equestrian estate in Laguna Hills, where Nicholas had constructed a warren of tunnels and underground rooms, including one that contractors alleged was intended to become a secret “sex lair.”

* A warehouse-office complex in nearby Laguna Niguel, which contractors said was used for the same purposes and nicknamed “The Ponderosa.”

* A Newport Coast residence where Nicholas was trying to start a record company and where rock groups frequently visited.

Filling a plane with so much pot smoke that the pilot had to put on an oxygen mask? You couldn’t make this stuff up if you tried.

Back in 1999, when some of these deeds are alleged to have occurred, I wrote a story about Broadcom for Fortune. Nicholas certainly was intense. He once boasted to me that he held the record for going without sleep at the company to meet a project deadline: 78 hours. I dug up the quote of him explaining how he did that:

It’s not as bad as you might think. Once you find your circadian rhythm, you can put your head down for an hour and a half, enter into a deep REM cycle, and get most of the cognitive benefits of sleep. We learned this at the Air Force Academy.

A little Ecstacy helps too.

(Photo by Richard Hartog/LA Times).

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