Ex-Broadcom chief faces drugging charges

Broadcom’s former chief executive was indicted on Thursday on charges that accuse him of participating in a stock options backdating scheme and engaging in narcotics violations that included spiking an industry executive’s drink with ecstasy.

The federal indictment, unsealed in Los Angeles on Thursday, also accuses Henry Nicholas III – who co-founded Broadcom, a leading global supplier of wireless chips – with hiring prostitutes for himself and customers and supplying them with drugs.

The indictment was unsealed after Mr Nicholas surrendered to federal agents. His lawyer did not immediately return a request for comment.

From 1999 to 2005, the indictment says, Mr Nicholas used and distributed ecstasy, cocaine, methamphetamine and other controlled substances.

He maintained premises for that purpose, including a warehouse and number of homes, at one point constructing an “underground room and tunnel” at a residential property in Laguna Hills, California.

Prosecutors accused Mr Nicholas of putting ecstasy in the drinks of industry executives and Broadcom customers without their knowledge.

The charges against Mr Nicholas came as federal prosecutors unsealed a separate 21-count indictment accusing him and William Ruehle, former chief financial officer, of engaging in a scheme to fraudulently backdate millions of stock option grants.

The company restated its financial results in January last year and reported more than $2.2bn in additional compensation expenses.

Mr Ruehle’s lawyer, Richard Marmaro, said: “Bill Ruehle is innocent of the charges in the indictment.”

Additional reporting by Chris Nuttall in San Francisco

Copyright The Financial Times Limited 2016. All rights reserved. You may share using our article tools. Please don't cut articles from FT.com and redistribute by email or post to the web.

More on this topic

Suggestions below based on Technology

Samueli pleads guilty over options

Henry Samueli, the billionaire California entrepreneur and philanthropist, on Monday pleaded guilty to making a false statement to federal authorities about his role in stock options backdating at Broadcom, the semiconductor company he co-founded in 1991.

Ex-Brocade CEO convicted in options case

Gregory Reyes, the former chief executive of Brocade Communications, was convicted on Tuesday of conspiracy and fraud in connection with back-dating stock options in the first time a jury has considered charges connected to the scandal.

Boom time for suspicious trades

Suspicious trading ahead of large US mergers and acquisitions has risen four-fold in the past five years, suggesting that the recent M&A boom might have sparked an even bigger increase in insider trading, according to analysis commissioned by the Financial Times.