Broadcom ex-CEO spiked customers’ drinks with ecstasy

Broadcom Corp's former CEO took cocaine and spiked customers' drinks with Ecstasy while also directing a criminal stock-options backdating conspiracy that cost the microchip company $2.2 billion, federal indictments released on Thursday charged.

Former chief executive and company co-founder Henry Nicholas III also hired prostitutes for himself and others and then used payoffs or threatened violence to keep the conduct secret, one federal indictment alleges. The charges come on top of a broader probe into one of the biggest stock-option backdating scandals among many that rocked corporate America when they started surfacing two years ago.

Failing to properly account for the valuable back-dated options from 1999 to 2005, Nicholas and other executives kept secret costs that could have dragged down high-flying stock prices, the government argues. Attorneys argued the parties with drugs and prostitutes were intended to win business.

Nicholas, 48, sold more than $1 billion of company stock during the backdating scheme, and still holds more than $300 million worth. Former Chief Financial Officer William Ruehle, 66, also indicted, was given options worth millions of dollars when they were granted, court papers say.

Ruehle's attorney said in a statement his client was innocent, and Nicholas's attorney, Gregory Craig, said in court his client would prevail against the charges.

Prosecutors argue Nicholas stocked a warehouse with drugs and electronics for parties. A pilot flying Nicholas and friends between Orange County and Las Vegas in 2001 once had to wear an oxygen mask to avoid marijuana smoke, the papers said.

Based in the quiet, conservative Orange County city of Irvine, Broadcom is one of Southern California's top technology firms, making microchips for everything from Apple iPhones to networking equipment.

Nicholas, a microchip engineer, founded it out of his home in 1991 with former PhD adviser Henry Samueli. A decade later, Nicholas was getting itemised receipts for drugs and having his assistant buy as much as $10,000 of narcotics for him, the government charges.

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