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Broadcom billionaire loses fight to keep e-mail on drug use secret

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Nicholas

A 2002 e-mail in which billionaire Henry T. Nicholas III says he has been on a drug binge that left him “not fully functioning” to run his company, Broadcom Corp., can be admitted as evidence in the criminal case against the Newport Coast tech mogul.

“The court cannot keep secret what is already public,” U.S. District Court Judge Cormac J. Carney wrote in a ruling unsealed Thursday.

Nicholas and William Ruehle, Broadcom’s former chief financial officer, have pleaded not guilty to 21 counts of conspiring to commit accounting and securities fraud by misreporting $2.2 billion in employee stock options. Nicholas also pleaded not guilty in a separate case alleging he distributed illegal drugs.

Nicholas had sought to keep the incriminating e-mail out of court, arguing it was a personal communication to his ex-wife and therefore privileged information.

Carney wrote that the e-mail could be used if NIcholas testifies during a trial and the e-mail contradicts his testimony.

“(T)he jury’s interest in finding the truth may outweigh Dr. Nicholas’ confidentiality in a troubled marriage,” Carney wrote.

Carney also said Nicholas can not claim privilege, because the e-mail was composed on a Broadcom computer without password protection; that it was circulated among several Broadcom employees and well-known to federal investigators; and that it was described in an Nov. 15, 2008, article in the  Orange County Register.

Carney’s ruling also noted that the e-mail could damage the defense of Ruehle, who cannot claim spousal privilege.

“The Email may be admissible against Mr. Ruehle as an admission of a co-conspirator,” Carney wrote.

The ruling details publicly for the first time how the e-mail passed among executives at Broadcom, months before Nicholas left the company in January 2003, saying he wanted to spend more time with his family.

Among the Broadcom employees who saw the e-mail, Carney wrote, were:

  • Henry Samueli, who co-founded Broadcom with Nicholas. Samueli, who also owns the Anaheim Ducks hockey team, has pleaded guilty to lying to investigators probing Broadcom’s stock options. He is awaiting sentencing.
  • Nancy Tullos, Broadcom’s former head of human resources, who has pleaded guilty to obstruction of justice in the stock options probe and is awaiting sentencing.
  • David Dull, Broadcom’s former general counsel, who is being sued with Nicholas, Ruehle and Samueli by the Securities and Exchange Commission in connection with the stock options case.
  • Scott Smith, a former Broadcom engineer who worked as Nicholas’ personal technical manager and who shared the e-mail with the Register, years after he sent a copy to the SEC and after the FBI interrogated him about its contents.

“I was fired for turning that e-mail in,” Smith said. “How do I feel? Basically, I feel exhonerated.”

To see Carney’s ruling, CLICK HERE.

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