For several years, Broadcom co-founder Henry Nicholas has been fighting charges that he conspired to commit accounting and securities fraud by backdating $2.2 billion in employee stock options, and that he distributed illegal drugs while with the company.
Nicholas’ co-founder, Henry Samueli, also was dragged through the mud during the federal investigation into Broadcom’s backdating scandal, eventually pleading guilty to one count of lying to federal investigators.
Yet today, in a dramatic reversal, their ongoing saga appears to have ended. U.S. District Judge Cormac Carney, who has presided over the hearings of co-founders, today dismissed the narcotics case against Nicholas. Carney’s decision comes six weeks after he threw out the securities fraud case against Nicholas and Samueli, who has since been reinstated as Broadcom’s chief technology officer.
The Associated Press reports on the spectacular turn of events:
The government’s high-profile case against the executives of one of the world’s leading chipmakers began to unravel in December, when Samueli testified under a rare grant of immunity at the securities fraud trial of former Broadcom CFO William Ruehle.
After hearing that testimony, Carney set aside Samueli’s guilty plea and dismissed the entire securities fraud case against Nicholas and Ruehle, just two days before a jury was to begin deliberations in Ruehle’s trial.
Carney said evidence showed prosecutors tried to influence the testimony of three key witnesses, improperly contacted witnesses’ attorneys and leaked information about grand jury proceedings to the media.
The judge then threw out the backdating case against Nicholas because he said Nicholas would need the same witnesses and could not receive a fair trial.
At the time, Carney also asked prosecutors to show why the narcotics case against Nicholas should not also be thrown out — and the government moved to drop the charges earlier this month.
What comes next for Nicholas remains to be seen, but one would guess that restoring his battered image will be a priority.
Among other embarrassments over the last few years, Nicholas’s ex-bodyguard alleged in court documents that Nicholas’s Laguna Hills mansion features a lair where he regularly indulged his “manic obsession with prostitutes.” His ex-wife, Stacey Nicholas filed a suit against him to break up their joint trust, saying he’d misspent tens of millions of dollars and threatened to have her “whacked.” Vanity Fair published a salacious feature about his life. Federal agents also seized the billionaire’s 15-year-old Gulfstream at one point, asserting that it was used to move illegal drugs like cocaine and ecstasy for distribution “domestically and internationally.”