High-tech magnate linked to cocaine

The Baltimore Sun

A former assistant to Broadcom Corp. co-founder Henry T. Nicholas III says in a lawsuit that the high-tech billionaire required him to oversee supplies of cocaine and other drugs, pay prostitutes from a $10,000 "petty cash" fund and conceal the "extracurricular activities" from his wife and others.

In their own legal filings, Nicholas' attorneys accuse Kenji Kato of making the accusations as part of an attempt to extort $9 million from Nicholas.

"These absurd allegations seem to be intended to disrupt the principal focus of my work, post-retirement, which would be in criminal justice and medical research," said Nicholas, who stepped down from Broadcom, a chip manufacturer, in January 2003.

Kato's allegations emerged amid a federal criminal probe of grant dates for Broadcom stock options. Nicholas' legal tribulations also include a divorce case with allegations of drug use.

Some of the events alleged in Kato's civil suit occurred during the years under scrutiny for the alleged manipulation of options.

Nicholas and Henry Samueli, his former engineering professor at the University of California, Los Angeles, and now the owner of the Anaheim Ducks hockey team, founded Broadcom in 1991 and rode it into the technology stock boom of the late 1990s.

At the height of the tech boom, their wealth was pegged at $10 billion each. The two made millionaires of many of their employees through the granting of stock options.

Kato was a personal assistant to Nicholas until last year and also worked for his media company, Level 7, which has been associated with such bands as Linkin Park and Julien-K and Grammy-winning producer Rob Cavallo. Rock bands occasionally recorded and partied at a house owned by Nicholas in Newport Coast, Calif., known as the Telescope House.

"Catering to his personal affairs and drug-induced conduct made my job more intolerable and consumed inordinate amounts of my time," Kato said in papers filed in Los Angeles County Superior Court.

The papers claim Nicholas would secretly spike the drinks of business associates with illicit drugs, demand that aides fill balloons with laughing gas to entertain guests at parties, and leave drug paraphernalia strewn around the Telescope House.

Nicholas also was said to sometimes stay up for days on end.

Kato and four others who worked at Telescope House signed sworn declarations about their experiences there and about Nicholas' alleged drug abuse.

"As for my supposed abnormal 'sleep habits,' the longest time I recall staying awake in the last 10 years was doing several all-nighters side by side with our current attorney general, Jerry Brown, to defeat Prop. 66," Nicholas said in his statement, referring to the 2004 initiative that would have amended the state's "three strikes" law.

"This effort prevented the release of tens of thousands of murderers, rapists and violent felons. You could ask our attorney general if he believed my behavior during this time was impaired and erratic or, rather, focused and intense," he said.

Nicholas' attorney, Steven A. Silverstein, who said he had worked with Nicholas for years, said the billionaire was eccentric and talkative, worked long hours and was known for his intensity, accounting for occasional missed appointments or heated exchanges with employees. But he denied that Nicholas was involved with illegal drugs or prostitutes.

$3 million deal

Kato's lawsuit alleges that Nicholas and his companies owed him $150,000 in unpaid wages on his $100-an-hour contract and later breached an agreement to settle his claims for $3 million.

Silverstein said the alleged agreement was only part of negotiations he conducted, as a sort of sting operation, at the request of the Los Angeles County Sheriff's Department, which had opened a criminal investigation of Kato after Silverstein reported that he was demanding $9 million. "There was never ever, ever any intent to ever pay a penny, not one penny, for the extortionate demands," Silverstein said.

Sheriff's officials confirmed that they had investigated Kato and turned the results over to the Los Angeles district attorney's office, which confirmed that the case was under review but wouldn't comment further.

Drug sharing alleged

Kato said Nicholas often shared drugs with his guests and business associates and sometimes provided them with prostitutes.

"He regularly used prostitutes himself, and oftentimes he would order me or my brother to pay for them using his 'petty cash,' " Kato said.

Denise Boudreau, who is described in Kato's declaration as another purveyor of drugs to Nicholas, denied that and the other Kato charges. Boudreau said Kato was resentful when Nicholas and others running Level 7 discovered that Kato had botched many assignments at the record company and removed him from Nicholas' "inner circle."

Boudreau said she had occasionally seen drugs used at Telescope House, but only by musicians who frequented the home, which had a recording facility. She said Nicholas was not present when the musicians used the drugs.

Nicholas' representatives said the billionaire never lived at the home and was there only occasionally.

Kim Christensen and E. Scott Reckard write for the Los Angeles Times.

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