Broadcom options backdating indictment

“The government’s indictment unsuccessfully attempts to transform a company’s technical accounting error into criminal conduct.”--Claims of sex and drugs In the drug indictment, Nicholas is alleged to have used death threats and payoffs to conceal his “unlawful conduct.”The indictment describes repeated drug purchases for Nicholas, which were sometimes disguised as “supplies” or “refreshments” on invoices.“In or around 2001, in the lobby of Broadcom’s offices . The document also lists three properties described in previous Los Angeles Times stories about Nicholas’ alleged indulgences in drugs and prostitutes:* An equestrian estate in Laguna Hills, where Nicholas had constructed a series of tunnels and underground rooms, including one that contractors alleged was intended to become a “secret and convenient lair” to indulge his “manic obsession with prostitutes.”* A warehouse-office complex in nearby Laguna Niguel, which contractors said was used for sex and drugs and nicknamed “The Ponderosa.”* A Newport Coast residence where Nicholas was trying to start a record company and where rock groups frequently visited.

In a 2006 lawsuit seeking back wages, former Nicholas aide Kenji Kato contended that this home also was the scene of frequent drug use and other sordid behavior.“The allegations of our complaint seem to be validated by the indictment -- both indictments,” said Joseph Kar, the attorney for Kato, whose lawsuit is pending in Los Angeles County Superior Court.

After Broadcom terminated the engineer -- and his stock options -- in October 2000, his attorney presented Nicholas and Ruehle with a draft of a lawsuit that would have exposed the illegal backdating if made public, prosecutors say.

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Broadcom is the latest technology-related firm to come under SEC scrutiny for stock option backdating.Samueli, who also owns the National Hockey League’s Anaheim Ducks, has denied any wrongdoing. He occasionally scowled as his lawyers and prosecutors argued over whether he should be held without bail as a flight risk and a threat to the community. Nakazato ordered that Nicholas be confined to a Malibu drug treatment facility, with electronic monitoring, and that his two private planes be disabled.Nicholas, who stepped down as Broadcom’s chief executive in 2003, surrendered Thursday morning to the FBI. Ruehle, 66, Broadcom’s former chief financial officer, were accused of backdating millions of stock options for five years to improperly reward employees. Nicholas will contest these charges vigorously,” his lead attorney, Brendan V. He warned Nicholas that he would be arrested if he violated any terms of his release, which also stipulate random drug tests.Broadcom co-founder Henry Samueli was not charged, but was referred to as an “unindicted co-conspirator” in the stock options indictment, which identified him by his initials. They are among the best-known entrepreneurs in Southern California, having helped shape Orange County’s modern image as a technology magnet.The Securities and Exchange Commission last month accused Samueli and Nicholas of backdating stock options to make them more valuable, leading Samueli to step aside as Broadcom’s chairman pending resolution of the case. “He is confident that he will be fully vindicated.”Ruehle’s lawyer, Richard Marmaro of Los Angeles, said Ruehle “looks forward to the opportunity to clear his good name in a court of law.” --Under close watch At an afternoon hearing in U. District Court in Santa Ana, Nicholas sat quietly in a jury box with criminal defendants from other cases, the unbuttoned sleeves of his dress shirt pulled over his handcuffs. Magistrate Judge Arthur Nakazato ordered Nicholas freed on bail of .4 million secured by property pledged by his mother, who was in court Thursday, and a group of friends.

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