Millionaire With a Sex Cave Busted

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Published on 19 Jul 2007, 14:51
Millionaire makes a Sex Cave for Prostitutes and Drugs. The Young Turks on Air America Radio, M-F 6-9am ET, and on

What is a man to do with $2.3 billion?

If you are Henry T. Nicholas III, one of the original dot-com billionaires -- whose fortune survived the crash of 2000 -- the answer is simple: build a "sex cave" under your house, maintain a fully stocked warehouse of drugs, get high on your two private jets, keep a brothel's worth of prostitutes on the payroll and, during the boring moments, spike your colleagues' drinks with Ecstasy.

That is what prosecutors claim in an astonishingly wide-ranging case against the 49-year-old technology tycoon that focuses on charges that he rigged his company's stock option scheme.

Gregory Craig, the lawyer defending Mr Nicholas, insists that his client is innocent and will prevail. "It's a kitchen-sink attack," he said yesterday. "They're trying to throw everything at him from eight years ago."

The main charges against Mr Nicholas of conspiracy and securities fraud were officially unsealed on Thursday.

Prosecutors claim that Mr Nicholas's company, Broadcom, "back-dated" stock options -- thus allowing executives to buy shares for an artificially low price, then sell them for a profit -- but did not disclose the arrangement publicly. This meant that shareholders were unknowingly picking up the bill and that the company's published accounts were essentially false. Broadcom's former chief financial officer, William J. Ruehle, also faces charges related to the stock options scheme and he, too, protests his innocence through his lawyer.

Most attention yesterday was focused on the accompanying 18-page indictment on drugs charges against Mr Nicholas. It detailed a lifestyle so extraordinarily profligate that not even the description of "Gatsbyesque" could suffice. It is alleged that Mr Nicholas hired prostitutes and escorts for himself, his employees and his customers, and conspired to obtain illegal prescriptions for drugs such as Valium. He also allegedly kept a warehouse full of drugs and built a $30 million "sex cave" under his mansion with a bar and a million-dollar sound system where he and his rock star friends indulged themselves.

In addition, it is claimed that Mr Nicholas's consumption of marijuana was so prodigious that during a 2001 flight on a private jet between Orange County and Las Vegas the pilot had to put on an oxygen mask; and that on two separate occasions he drugged unsuspecting colleagues with Ecstasy.

According to prosecutors, Mr Nicholas required several unnamed co-conspirators to provide detailed invoices for drugs they sold to him and used codenames such as "party favours" and "refreshments" to conceal what was being traded.