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Broadcom Founder Goes Free

The criminal drug case against Henry Nicholas is thrown out, completing a shutout defeat for federal prosecutors

Craig Matsumoto

January 29, 2010

2 Min Read
Broadcom Founder Goes Free

As anticipated, the criminal case against Broadcom Corp. (Nasdaq: BRCM) founder Henry Nicholas has been dismissed.

Thus ends the made-for-TV half of Nicholas's case -- the part that had all the stuff about drugs and prostitutes. The ruling, declared yesterday by U.S. District Judge Cormac J. Carney, follows the earlier dismissal of the made-for-thick-textbooks case that dealt with stock-options backdating.

The case dismissal appeared the most likely outcome when Carney last month dismissed the fraud charges against Nicholas and former CFO William Ruehle, and dismissed a Securities and Exchange Commission (SEC) case against four executives including Henry Samueli, who founded Broadcom with Nicholas in 1991. (See Broadcom Options Case Disintegrates.)

The final nail in the coffin came yesterday when, in a case that didn't quite get the attention afforded to Nicholas's, Carney threw out a guilty plea previously filed by Nancy Tullos, Broadcom's former VP of human resources. Tullos had been a key witness, but Carney ruled prosecutors had improperly intimidated her, Samueli, and others.

Federal prosecutors might begin Round 2 next. The Los Angeles Times and Orange County Register reported yesterday that prosecutors can appeal the dismissals of the stock-options cases against Nicholas and Samueli, and that the SEC plans to refile its civil lawsuit against four executives.

The SEC filed its fraud charges against Broadcom executives in May 2008. (See Options Scandal Deepens at Broadcom.)

A month later, Nicholas was arrested on stock-options charges as well as drug charges. The latter apparently stemmed from a 2007 civil lawsuit in which a contractor described all sorts of salacious uses for the underground rooms Nicholas had built. (See Henry Nicholas, Party Animal?, Options Scandal Deepens at Broadcom, Former Broadcom CEO Surrenders, and Henry Nicholas's Undoing.)

Nicholas almost certainly had a drug problem during his last years at Broadcom, as Carney pointed out in his remarks in court yesterday. (Carney also commended Nicholas for being, in Carney's estimation, two years sober.)

— Craig Matsumoto, West Coast Editor, Light Reading

About the Author(s)

Craig Matsumoto

Editor-in-Chief, Light Reading

Yes, THAT Craig Matsumoto – who used to be at Light Reading from 2002 until 2013 and then went away and did other stuff and now HE'S BACK! As Editor-in-Chief. Go Craig!!

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