Some Billionaires Play Golf. Broadcom Founder Henry Nicholas Preferred Drug Fueled Hooker Orgies In His Private Sex Dungeon.

Random Celebrity Article By on August 20, 2014

At first glance, Henry Nicholas III comes across as just your typical mild-mannered internet billionaire. He is known today as a religious man who is very active in the Episcopal Church. He is also the founder of a philanthropy called Justice for Homicide Victims, Inc., a non-profit organization that supports the families of murder victims that Henry launched in honor of his late sister. Based on these qualities, Henry certainly seems like an upstanding man of high moral value, right?  Certainly not a man who at one point in his life built a secret sex lair under his house to host wild orgies. Certainly not a man who once faced charges of prostitution, distribution of cocaine, and meth. Certainly not a man who once smoked so much weed on his private jet that the pilot was forced to wear an oxygen mask to avoid getting a contact high. Who exactly is this Henry Nicholas character? An upstanding successful entrepreneur with high morals? Or a depraved drug fiend presiding over a sex dungeon in his Laguna Hills, California home? Let's take a look…

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Henry Nicholas was born in Cincinnati in 1959. His father, Henry Nicholas Jr., was an attorney for the IRS who struggled with alcoholism. Henry's parents divorced when he was four years old. After the divorce, Henry and his sister Marsalee moved with their mother to Santa Monica, California. His mother remarried in 1967. Henry's stepfather was a screenwriter named Robert Leach. Henry, who has gone by "Nick" since he was young, graduated from Santa Monica High School and went on to the United States Air Force Academy. He dropped out after three years when it became clear that at 6'6″ tall, he would never be a fighter pilot. So he enrolled at UCLA and eventually earned a B.S. in 1982, M.S in 1985, and PhD in 1998, all in electrical engineering.

While Nicholas was in graduate school at UCLA in 1983, his family suffered a tragic loss. His sister Marsalee, who was a 21 year old senior at UC Santa Barbara, was murdered by an ex-boyfriend. The family was devastated. Henry and Marsalee's step-father would go onto become a leading figure in California's victim's rights movement.

After finishing school, Henry Nicholas went to work at the defense contractor TRW. There he met his future Broadcom partner Henry Samueli. He also met a fellow electrical engineer named Stacey Feller. Five years younger than Nicholas, they quickly started dating and were married in 1987. Around this same time, the two Henrys began consulting part-time for a start-up company called PairGain Technologies.

The Two Henrys

The Two Henrys

Broadcom

Nicholas and Samueli founded Broadcom in the spare bedroom of Nicholas' Redondo Beach condominium in 1991. They each invested $5,000 of their own money to get the business off the ground. Nicholas was the C.E.O., and Samueli served as the chief technologist.

Broadcom would eventually go on to make computer chips that enable voice, video, data, and multi-media to travel at very high speeds. Their chips were revolutionary in building high-speed Internet, Wi-Fi and Bluetooth technology. Nicholas quickly became well known for his work ethic. He was driven and slept no more than three or four hours a night in pursuit of his vision. He also soon developed a reputation for extreme arrogance.

Nicholas and Samueli took their company public on April 17, 1998 right smack dab in the middle of the original dotcom frenzy. Broadcom stood out from the other dot-coms of the day because, unlike all the rest, their company actually produced profits by the time it went public! The company was one of the fastest companies in history to achieve $1 billion in annual revenue.  On IPO day, Broadcom's stock debuted at $4 a share and over the course of the first day of trading more than doubled. When the final bell was run that day, Nicholas and Samueli were each worth more than $600 million dollars. It was one of the hottest public offerings in history. Six months later both Henry Nicholas and Henry Samueli were billionaires.

By August 2000, Broadcom's stock was at $182.42 per share. At this price, Broadcom's market cap topped $60 billion. The average Broadcom employee was worth $6 million dollars.  The company's parking lot was filled with Porches, Ferraris, Lamborghinis, and other expensive luxury cars. The two Henrys were each worth $10 billion.

As a result of their respective windfalls, Nicholas and his wife Stacey began to spend lots of money. Or, rather, Nicholas did. Despite her new found wealth, Stacey still preferred her more modest minivan and shopping trips to Target over the luxury vehicles her husband seemed to acquire by the dozen.  Nicholas also bought an aviation company called Prestige Air that gave him access to three private jets and a helicopter.

Private Jet Over San Francisco

The Underground Lair

Henry and his wife soon began to renovate their house.  They lived in the Nellie Gail Ranch area of Laguna Hills – one of the most luxurious developments in the area. The Nellie Gail Ranch features 20 miles of equestrian trails and homes that are 5,000 square feet are considered small. Just a week after Broadcom's I.P.O. Nicholas and his wife bought a much larger home a few doors down Rodeo Circle from their current home for $1.7 million. They immediately began a $400,000 renovation project that would balloon into a budget of more than $30 million by the time the saga was complete.

Apparently Henry Nicholas was not content to sit back and enjoy the well-deserved quiet home life of an internet billionaire. On the contrary as a matter of fact. Nicholas had a plan that would allow him to indulge in what he considered the finer things in life (sex, drugs, prostitutes etc). While his wife settled in the main area of their property, Henry set out to build the ultimate (hedonistic) man cave.

Henry's dream man cave was actually an underground lair that would be built below the family's hillside home.  Nicholas had contractors create a tunnel leading down to a series of rooms between the house's gym and library that would eventually connect to a 2,000 square foot personal sports bar that was to be called Nick's Café.

In the library, a panel opened toward the passageway. The tunnel had faux stone walls with impressions of skulls carved into niches, which were lit by candelabras. The underground lair had a number of entrances and exits – there was a staircase in the sports bar that lifted up, an entrance covered by a rock close to the wine cellar, and an exit onto a horse trail that was disguised as a supply shed.  The lair was filled with every amenity for decadence they you can imagine. Twelve-foot high ceilings, columns covered in 24-carat gold leaf, top of the line sound equipment and a Jacuzzi were all contained in the rooms that brought to mind someone's harem fantasy gone overboard.

laguna

The ongoing construction made Nicholas' neighbors impatient and they soon began to complain – especially when they were confronted by Henry's armed guards on the horse trail. Neighbors called city officials in Laguna Hills who discovered that there was no permit for any of the construction. The city officials shut Nicholas down immediately.

Nicholas was too addicted to the idea of his own secret lair to let it go so easily, so he bought a warehouse in a gritty industrial district five minutes from his home. He basically just shifted all the contractors from his house to the warehouse where they were instructed to build a replica of the lair.

The warehouse lair was soon given the name "The Ponderosa" or "The Pond" as regulars came to call it. Visitors entered through a secret passageway that opened up to a large room decorated in red and gold. Nicholas liked the Pond so much that he began to host wild parties there. According to government prosecutors, it was at these parties where Henry supplied drugs like cocaine, ecstasy, and marijuana to his guests. Prostitutes were an abundant mainstay at the Pond. Henry basically treated the Pond as his own personal brothel.

Unfortunately, the good times did not roll forever. In May 2002, Henry's wife Stacey drove over to The Pond and caught Nicholas red handed cheating on her with a prostitute. Henry was also reportedly sky-high on drugs.  Stacey immediately filed for divorce. The battle between the former spouses took more than seven years to finalize, during which time Henry allegedly spent more than $1 million dollars of their joint family trust to have Stacey followed and intimidated. According to 2008 court documents, Henry once even told his ex-wife that he could have her "whacked". She later withdrew this claim. But Stacey wasn't the only person furious with Henry Nicholas. In the fall of 2002, seven contractors who'd worked on the project both at his home and at the warehouse filed a lawsuit against the aspiring playboy alleging that he used "manipulation, lies, intimidation, and death threats" to get out of paying the bills presented to him.

Nicholas stepped down as CEO of Broadcom in 2003, ostensibly to work on his marriage and family life. Law enforcement closed in on Nicholas, accusing him of hosting a revolving parade of prostitutes, the spiking of clients' drinks with Ecstasy, and most importantly: Backdating stock prices.

Former employees alleged that Nicholas used the drugs and prostitutes to get an advantage in business. A former event planner for Broadcom testified that he saw Nicholas put "powdered ecstasy pills into the drinks of his customers."  A Broadcom engineer also stated in a lawsuit that Nicholas had "a practice of hiring prostitutes to greet customers, business associates, and for himself." Reportedly, Nicholas even gave these prostitutes titles at Broadcom. He called them professional saleswomen.

Away from all the sex, drugs and parties, Broadcom had a bigger problem. An accounting problem.

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The Indictments and Trials

After the dot-com boom, the government launched a massive investigation into charges that many companies, including Broadcom, Apple, and other technology giants, engaged in backdating stock-options. When a company backdates an option, it alters the date at which that option was actually granted. If the stock has gone significantly up or down, you can guess why changing the date you were given the shares might be a valuable advantage.

Broadcom received an inquiry from the Securities and Exchange Commission in June 2006. Broadcom launched an internal inquiry and found that certain executives did backdate stock options. The issue was not whether companies were entitled to issue options that are already "in the money". Companies have the right to do that. But when they do that they are supposed to take a noncash charge to earnings to accurately reflect the correct amount to shareholders. Tech companies were reluctant to follow that rule because they lived for earnings growth.

Four years after Nicholas left Broadcom, in January 2007, the company accepted a $2.2 billion charge to account for the cost of the backdated options. That is the largest charge taken by any company that was a part of the dotcom era. Broadcom placed the blame squarely on three former employees: Bill Ruehle, the CFO who had resigned that fall due to the stock-option inquiry; former VP of human resources Nancy Tullos; and Henry Nicholas, who, in an official statement from Broadcom, "bears significant responsibility for the lack of adequate controls in the option granting process due to the tone and style of doing business he set."

Alongside the backdating of options, Nicholas was charged with drug distribution tied to all those parties in his never fully competed underground lair and at the Pond.  Prosecutors were aware that Nicholas wasn't in the business of selling drugs, but there were too many reports that detailed how freely available drugs were at his parties.

In April 2008, Henry Nicholas voluntarily checked himself into a Betty Ford alcohol-rehabilitation program and then went on to complete treatment at Cliffside Malibu. He threw himself into sobriety and philanthropy. Would this influence the outcome of the cases waged against him?

Ultimately and surprisingly, both the charges of options backdating and drug distribution were dismissed in 2010. Since then, Henry Nicholas has focused his energies on both fighting the continual stream of lawsuits still coming his way, and on philanthropy thanks to his $1.15 billion personal net worth. He established the Nicholas Academic Centers and those centers have sent more than 200 students to top-ranked universities. Through his Henry T. Nicholas Foundation, he frequently gives to Episcopal Church community causes as well as arts and education programs. In 2008 he mobilized California to pass Marsy's Law, a crime victim's bill of rights, named for his murdered sister.

Henry Nicholas III still says he didn't do it. And even though the charges were dropped, far too many people took part in his infamous sex and drug laden parties to believe it didn't happen.  Nicholas' drive and ambition allowed him to create an empire, but once he was a billionaire, he couldn't handle the success and went into self-destruction mode. As Rick James once said, "cocaine is a hell of a drug."

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Articles Written by Amy Lamare
Amy Lamare is a Los Angeles based writer covering entertainment, sports and pop culture. She spent 8 1/2 years covering the entertainment industry for www.hsx.com. Amy writes the website www.gridirongoddess.net. She attended the University of Southern California where she majored in Creative Writing. An avid long distance runner, weekends she can be found running 1/2 and full marathons. Follow her on Google+.
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Nicknames
Henry T. Nicholas III
Date of Birth
1959
Nationality
United States of America
Profession
Country
United States of America
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