Broadcom ex-CEO indicted over drugs, options

01:43, Jan 31 2009

The playboy former chief executive of Broadcom Corp took cocaine and spiked customers' drinks with ecstasy as he directed a stock-options backdating conspiracy which cost the company $US2.2 billion ($NZ2.85 billion), indictments charged.

Former CEO and technology company co-founder Henry Nicholas hired prostitutes for himself and others and then used threats of violence and payoffs to keep the conduct secret, one federal indictment alleges.

Nicholas, 48, surrendered to the Federal Bureau of Investigation on Thursday and is expected to appear in court along with former Chief Financial Officer William Ruehle, 66, who is indicted as conspiring with his former boss on the backdating charges between 1999 and 2005, the US Attorney's office said.

Prosecutors said they would ask a federal judge on Thursday to keep Nicholas in jail without bail because of his alleged history of intimidating witnesses, and since he is a flight risk, given his fortune.

Nicholas sold more than $US1 billion of company stock during the stock-options backdating scheme, while Ruehle was granted options worth millions of dollars when they were granted, the court papers say.

Broadcom in 2007 restated financial results and took more than $US2.2 billion in charges for additional compensation expenses of options that were given to employees with manipulated dates in order to maximize their value.

Lawyers for both men and Broadcom were not immediately available for comment.

Shares of Broadcom were up 3.3 percent to $US29.04 in afternoon trade on Nasdaq.