Henry T. Nicholas III, cofounder and former CEO of Broadcom, along with former CFO Wiliam Ruehle, were indicted yesterday on multiple charges related to backdating of stock options in the Federal District Court in Santa Ana, Calif.
Lawyers for both executives maintain they are innocent of all charges.
Nicholas, nicknamed Darth Vader by rivals for his competitiveness, turned himself in to the FBI yesterday morning and appeared at his arraignment in federal court in Santa Ana. A federal magistrate, Arthur Nakazato, ordered both Nicholas and Ruehle released, a spokesman for the U.S. attorney’s office told the NYT.Bond was set at $3.4 million for Nicholas, and he will be subject to home detention and required to complete a rehab program. Ruehle’s bond was set at $2.6 million.Nicholas’s lawyer, Brendan V. Sullivan Jr., said in a statement: “Dr. Nicholas will contest these charges vigorously. He is confident that he will be fully vindicated.”
In one incident described in the indictment, Nicholas and his guests are said to have inhaled so much marijuana on a flight to Las Vegas from Orange County, Calif., that clouds of smoke and fumes drifted into the cockpit of the private plane and the pilot was required to put on an oxygen mask.
Nicholas resigned from Broadcom in 2003 at the time saying he was going to focus on salvaging his marriage after his wife, Stacey, filed for divorce.
Ruehle, who faces conspiracy and securities fraud charges, is not charged with drug violations.In the backdating indictment, the federal government said it was done to reward Broadcom employees, including Ruehle. It said that Nicholas concealed the backdating by signing false documents that stated the options had been approved as of earlier dates.
“Bill Ruehle is innocent of the charges in the indictment and he looks forward to the opportunity to clear his good name in a court of law,” said Richard Marmaro, Ruehle’s lawyer, in a statement. “Bill is a man of the highest integrity, and his reputation in the financial community has always been impeccable. At all times, Bill acted in good faith and believed Broadcom’s financial statements were accurate.”
Marmaro added: “Broadcom was by no means the only company to make this accounting mistake. At last count, nearly 250 companies have acknowledged internal stock options investigations, and approximately 130 of these companies have announced restatements relating to mistakes in their options accounting.”