Now Hear This!

The story of Henry T Nicholas III’s two lives will surely soon be run as a Lifetime TV movie.

In one life, Nicholas has publicly acted as a political crusader. A strong financial supporter of the campaigns of Arnold Schwarzenegger and George W Bush, the stanch republican has participated in the Orange County Sheriff's "Drug Use is Life Abuse" program, opened his wallet to the tune of $1 million to support a California anti-gang proposition that with his help will be on the November ballot, and spent years fighting for a public safety act focused on gun violence and named after his sister who was shot and murdered by an ex-boyfriend in 1983.

But it’s his second life, one that he failed to keep secret, that has been the focus of media reports this month.

The ex-CEO and co-founder of the communications chipmaker Broadcom pleaded not guilty yesterday to the federal drug and securities fraud charges against him. His plea is perplexing; are we to believe the FBI made up such outlandish allegations without having a solid case?

Nicholas surrendered to FBI special agents on June 5, after a federal grand jury returned two indictments, one 65 pages long charging him with securities fraud in connection with Broadcom’s stock-option backdating and $2.2 billion charge, and one 18 pages long charging him with so, so many wrong doings, including drug distribution, maintaining drug houses and a warehouse, hiring prostitutes, and spiking Broadcom customers’ drinks with ecstasy.

Read the indictment and you see allegations of Nicholas and others smoking so much pot on a private plane that the pilot had to put on an oxygen mask. Narcotics claims continue on to include allegations that Nicholas had a drug courier deliver to Broadcom’s lobby. There have also been allegations that Nicholas used caves under his primary home for the drug dealings.

Much of this, according to the allegations, went on while Nicholas was still at Broadcom’s helm. In 1991, Nicholas started Broadcom with Henry Samueli (who, btw, has resigned as chairman on stock allegations). When Broadcom went public in 1998 with a record setting IPO and a 123% stock-price jump on day one, Nicholas and several other company execs became instantly wealthy and overnight industry rock stars. Nicholas, in particular, fit the bill: Always impeccably groomed, and at 6-foot 6-inches, he stood out at industry events. The buzz surrounding the 40-something engineer was impossible to ignore, even in the electronics industry’s heyday and following downturn.

Nicholas resigned as Broadcom’s president and CEO in 2003, reportedly to save his marriage and spend time with his kids. Considering his wife’s push for a divorce and the hostile remarks made by Nicholas in a 2007 LA Times article on his relationship with his kids, that effort seems to have failed as miserably as his attempts to keep his underground life secret. 

The most tragic part of Nicholas’ unraveling is of course not that he will most likely spend decades in jail, but the affect on his wife and three children, and less so the affect on Broadcom’s reputation. The company’s technology, some of which is best-in-class, will take a back seat until the dust settles on Nicholas’s trial. Did Broadcom’s other execs and board know about Nicholas’ second life? If they did, that raises a slew of corporate-governance questions that will make Broadcom’s recent stock-option backdating mishap look like a day in the park.

Share your thoughts on the Nicholas’ plea, the allegations against him, and how the situation will impact Broadcom below. 

--Suzanne Deffree, Managing Editor, News