Broadcom co-founder drugged drinks, indictment says

Broadcom co-founder Henry Nicholas was indicted on charges of backdating stock-options and illegal use of narcotics.

Broadcom co-founder Henry Nicholas on Thursday was indicted for possession and distribution of drugs and on charges of backdating stock options that caused the technology company to write-down US$2.2 billion in profits.

For over nine years, Nicholas maintained a warehouse where he stored drugs including ecstasy, methamphetamine and cocaine, the indictment alleged. Nicholas put ecstasy in the drinks of industry executives and Broadcom clients, and supplied prostitutes and escorts he had hired with drugs, according to court documents.

The indictment alleges Nicholas and others smoked "extensive amounts of marijuana during a flight on a private plane between Orange County and Las Vegas, causing marijuana smoke to enter the cockpit and requiring the pilot to put on an oxygen mask."

Nicholas and former Broadcom Chief Financial Officer William Ruehle were also indicted for engaging in stock-option backdating between 1999 and 2005 and falsifying corporate books and records.

Nicholas and Ruehle were allegedly involved in schemes to give employees the option to buy stock set at a future price without recognizing its fair value, according to the indictment. The stock grant dates were selected to coincide with the low points of Broadcom's stock price.

The indictment also alleged that false statements were filed with the U.S. Securities and Exchange Commission through 2005 about Broadcom's stock option grants.

The fraud resulted in the largest financial restatement related to options backdating in U.S. history, with Broadcom adding more than US$2.2 billion in additional compensation to its financial results in January 2007, according to the U.S. Department of Justice.

Nancy Tullos, Broadcom's former vice president of human resources, who is named in the securities fraud indictment, pleaded guilty in November to one count of obstruction of justice in connection with an earlier investigation into stock-options backdating at Broadcom by the DOJ.

Nicholas was the co-founder of Broadcom in 1998, and he served as CEO and co-chairman on the company's board of directors until May 2003.

Join the PC World newsletter!

Error: Please check your email address.
Rocket to Success - Your 10 Tips for Smarter ERP System Selection
Keep up with the latest tech news, reviews and previews by subscribing to the Good Gear Guide newsletter.

Agam Shah

Computerworld
Show Comments

Most Popular Reviews

Latest Articles

Resources

PCW Evaluation Team

Matthew Stivala

HP OfficeJet 250 Mobile Printer

The HP OfficeJet 250 Mobile Printer is a great device that fits perfectly into my fast paced and mobile lifestyle. My first impression of the printer itself was how incredibly compact and sleek the device was.

Armand Abogado

HP OfficeJet 250 Mobile Printer

Wireless printing from my iPhone was also a handy feature, the whole experience was quick and seamless with no setup requirements - accessed through the default iOS printing menu options.

Azadeh Williams

HP OfficeJet Pro 8730

A smarter way to print for busy small business owners, combining speedy printing with scanning and copying, making it easier to produce high quality documents and images at a touch of a button.

Andrew Grant

HP OfficeJet Pro 8730

I've had a multifunction printer in the office going on 10 years now. It was a neat bit of kit back in the day -- print, copy, scan, fax -- when printing over WiFi felt a bit like magic. It’s seen better days though and an upgrade’s well overdue. This HP OfficeJet Pro 8730 looks like it ticks all the same boxes: print, copy, scan, and fax. (Really? Does anyone fax anything any more? I guess it's good to know the facility’s there, just in case.) Printing over WiFi is more-or- less standard these days.

Ed Dawson

HP OfficeJet Pro 8730

As a freelance writer who is always on the go, I like my technology to be both efficient and effective so I can do my job well. The HP OfficeJet Pro 8730 Inkjet Printer ticks all the boxes in terms of form factor, performance and user interface.

Michael Hargreaves

Windows 10 for Business / Dell XPS 13

I’d happily recommend this touchscreen laptop and Windows 10 as a great way to get serious work done at a desk or on the road.

Featured Content

Latest Jobs

Don’t have an account? Sign up here

Don't have an account? Sign up now

Forgot password?