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Sex, Drugs, and Options Backdating

The government accuses Broadcom founder of securities fraud and slipping mickeys.
Henry Nicholas

Henry Nicholas is like a dream come true for the federal investigator stuck in the white-collar department probing routine accounting frauds.

That's because the Nicholas investigation evolved into much more than just the options-backdating allegations that brought him to the Fed's attention. The government unsealed two indictments today against the former Broadcom chief executive accusing him of 25 charges.

The first includes your standard fare: conspiracy, securities fraud, filing false statements, wire fraud, and falsifying financial statements.

The second includes a whammy: conspiracy to distribute and acquire controlled substances.

According to the Los Angeles Times, Nicholas surrendered to authorities this morning.

Nicholas was separated from the pack of other executives caught up in the options-backdating scandal when two lawsuits filed against him included salacious details about his "personal brothel" and "addiction to cocaine and ecstasy." A construction company that filed one of the suits alleged that Nicholas had plans to build an elaborate, secret hideaway in which to engage in his extracurricular activity.

The indictment unsealed today accuses Nicholas of spiking his Broadcom employees' drinks with ecstasy and maintaining a warehouse for ecstasy, cocaine, and methamphetamine, according to the Associated Press.

Last month, his attorney said that Nicholas had entered an alcohol rehab program.

As for the securities-fraud charges, Broadcom's former chief financial officer William Ruehle was also named in the indictment.

Nicholas and former Broadcom chairman Henry Samueli were already charged with civil crimes relating to the backdating by the Securities and Exchange Commission. In April, the company agreed to pay $12 million to settle all charges against it for the accounting mishaps that caused it to restate earnings to reflect $12 billion in unreported compensation.


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