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Broadcom exec faces drug, conspiracy charges

Federal officials unsealed two indictments charging Broadcom co-founder Henry T. Nicholas III with conspiracy and securities fraud relating to stock options backdating.
Broadcom Indictment
Henry Nicholas, billionaire co-founder of chip maker Broadcom, was charged with drug charges and crimes related to stock options back-dating.Damian Dovarganes / AP
/ Source: The Associated Press

Federal officials unsealed two indictments Thursday charging Broadcom co-founder Henry T. Nicholas III with conspiracy and securities fraud relating to stock options backdating, as well as numerous drug charges.

The indictments allege a total of 25 counts against Nicholas, including conspiracy, securities fraud, false certification of financial reports, filing false statements with the U.S. Securities and Exchange Commission, wire fraud and conspiracy to distribute and acquire controlled substances.

The indictment regarding stock options also names Broadcom's former chief financial officer, William J. Ruehle, who faces charges including conspiracy and securities fraud. He is not charged with drug violations.

Last month, securities regulators charged Nicholas and Henry Samueli, who co-founded the chip maker with Nicholas, in a civil suit with falsifying the company's reported income, leading to what is believed to be the largest accounting restatement yet because of backdating stock options.

Nicholas spokesman Mark Saylor referred calls to another spokesman, who said lawyers for Nicholas had no comment.

Nicholas, 48, served as CEO and president since Broadcom's inception until he resigned in 2003. In April, an attorney for Nicholas said he had entered an alcohol rehabilitation program.

Ruehle, 65, joined the company in 1997 as vice president and chief financial officer and retired in 2006.

Samueli stepped down as chairman of the company's board of directors and planned to take a leave of absence as chief technology officer, according to a May statement from the Irvine, California, company.

The SEC's civil complaint also charges former chief financial officer William J. Ruehle and general counsel David Dull.

The SEC said that as a result of the scheme to backdate options without properly accounting for the move, Broadcom had to restate its financial results in January 2007 and report more than $2 billion in compensation expenses it hadn't accounted for.