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Former Broadcom CEO Surrenders

Reports say Henry Nicholas, a Broadcom Corp. (Nasdaq: BRCM) founder and former CEO, surrendered to federal agents today after being indicted on charges related to stock options backdating and, separately, drug use.

Documents unsealed today reveal that a grand jury indicted Nicholas for fraud and conspiracy in October. The Los Angeles Times reports Nicholas was set to make a court appearance this afternoon.

The more sensational half of the story comes from a terse 18-page indictment documenting Nicholas's alleged drug use from 1999 to 2005. (Nicholas left Broadcom in 2003, citing deep personal and family issues.)

It describes numerous instances of Nicholas obtaining MDMA (Ecstasy) for various parties and events, including Woodstock '99 and a Super Bowl. Later, the allegations branch out to include cocaine, methamphetamines, and prescription drugs including Valium.

Nicholas is accused of distributing drugs at various residences and at an office-warehouse space he'd leased out. He's also accused of lacing customers' drinks without their knowledge and of paying a Broadcom employee $1 million to keep quiet about some of the goings-on. Prostitutes, of course, merit a brief mention.

Nicholas's lifestyle has been the subject of speculation since a lawsuit last year accused him of building an underground sex-and-drugs lair at his palatial home. (See Henry Nicholas, Party Animal?)

The stock options indictment is longer, at 65 pages, and chronicles specific instances of alleged backdating from 1999 to 2002. Former CFO William J. Ruehle is also named as a defendant in that indictment.

Broadcom has had to contend with an ongoing Securities and Exchange Commission (SEC) investigation over stock options. The SEC has filed charges against four executives including Nicholas. The two who were still with Broadcom -- CEO Henry Samueli and general counsel David Dull -- took leaves of absence from their posts as a result. (See Options Scandal Deepens at Broadcom.)

Broadcom paid $12 million in April to settle an SEC fraud suit.

— Craig Matsumoto, West Coast Editor, Light Reading

gocowboys 12/5/2012 | 3:39:19 PM
re: Former Broadcom CEO Surrenders Wonder if he is interesting in running ALU? :-)
chips_ahoy 12/5/2012 | 3:39:18 PM
re: Former Broadcom CEO Surrenders
market cap comparison...
PMCS 2B
MRVL 11B
AMCC 0.6B
BRCM 15B

i know if you snooze you lose.

apparently, if you backdate and party like a rock star for 10 years you win.
Pete Baldwin 12/5/2012 | 3:39:09 PM
re: Former Broadcom CEO Surrenders Jeez. This just keeps getting (allegedly) worse.

http://legalpad.blogs.fortune....
deauxfaux 12/5/2012 | 3:39:00 PM
re: Former Broadcom CEO Surrenders Nick has always been, and always will be a self absorbed nut job. Just ask the guys that got called in for staff meetings at 2:00 in the morning. I heard enough stories about the guy back then to know that some amount of it had to be true.....but now it sounds like (allegedly) most of it was.

It was always just a question of time before all of this caught up with him.
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