Sex, drugs and Broadcom

Now we have private eyes being hired by the wild-and-crazy Henry Nicholas III to dig up whatever they can on Kenji Kato, who claims to have been the facilitator for the Nicholas-sanctioned bad behavior. We're talking mostly about supplying Broadcom friends with drugs and prostitutes – lots of drugs and prostitutes. Kato sued Nicholas earlier this year (zero news coverage for some reason), and the feds, who had been looking into option-backdating practices at Broadcom, are now poking into the various allegations laid out by Kato (Nicholas attorneys are calling him a grade-A extortionist). Federal investigators served a bunch of subpoenas this week, and while that doesn't necessarily mean anything in the long-term, it has gotten details of Kato’s suit into the papers.

The WSJ, which was the first to report on the government inquiry, says that both Kato and Nicholas "are using the courts and other channels to sling lurid allegations. Even by the standards of Southern California noir, the dispute is unusually colorful, involving secret taping, supposed prostitutes and dueling criminal investigations." For my money, Nicholas has never gotten enough attention as one of the nation's weirdest CEOs. In the early 1990s, he co-founded Broadcom in his Redondo Beach apartment, and later, as the company became a billion-dollar maker of computer chips, developed an appetite for private jets, sports cars, and, well, just strangeness (crazy work hours, over-the-top demands, etc.). Out of the blue, Nicholas left Broadcom 2003, saying he wanted to repair his marriage and spend more time with his children (he and his wife are in the throes of a nasty divorce). In the midst of all this, Nicholas has contributed millons of dollars to arts and education causes, and now fancies himself a philanthropist. Here's more from the Journal on Kato's suit:

His suit says he forged a "parent-son bond" with Mr. Nicholas, whom he quotes as having said: "I'm taking Kenji under my wing.... He's got a job for life." The role came with fantastic perks, from nights in a Las Vegas penthouse to rides aboard Mr. Nicholas's Italian-made Agusta helicopter, Mr. Kato says in an interview. One task was getting ready for a concert in Anaheim called the May 2000 KROQ Weenie Roast. A typed memo from the Kato firm of "Important Details" for Mr. Nicholas's "VIP services team," reviewed by the Journal, includes:

"Never take you eyes off Nick! You blink, he's gone. Don't ever lose him."

"Do not tell Broadcom employees anything! -- especially Nick's itinerary/activities."

"Do not flirt with the client's dates, wives, dancers, etc. (this is a sensitive one guys)."

"Never hand over a credit card at a strip club."

Things to be brought along included "premium cigars" and "2 Red Bull's for sunrise," referring to a caffeinated drink. Mr. Nicholas's lawyer says he knows nothing of the memo.

Ever Johnny on the spot, the LAT patched together a p1 me-too piece this morning that still leaves it a full day behind the Journal. LAT reporters visited Nicholas at his Newport home both Thursday and Friday and yet Nicholas has little or nothing to say (maybe the paper is just holding onto its good stuff?). Oh, and by the way, no credit to the Journal for first reporting the story. Nice. Bad news for the folks playing catch up: This morning's Journal piece was written by James Bandler, who is part of the paper's investigative team that won a Pulitzer for its coverage of the options backdating scandal.