Kato's lawyer, Joseph Kar, said his client knew of the James case only because "Dr. Nicholas had mentioned it infrequently." But Kar said he and his client "have not seen that complaint" and were unfamiliar with its allegations.
Nicholas made no secret of the underground passageways and rooms under his Laguna Hills home, but the filing by James contended the subterranean complex was more elaborate than even Stacey Nicholas was aware of and ultimately cost $30 million over three years.
Nicholas took his wife to Hawaii for a week in August 2000 while work on his secret chamber was being completed, the filing claimed. Stacey Nicholas has since filed for divorce.
"Plaintiffs were promised payment and/or threatened with financial ruin -- whatever it took -- if they failed to complete the task within a week," the draft complaint said, and hundreds of workers began toiling 18 hours a day to excavate and pour concrete.
The noise and presence of armed guards hired to block access to community horse trails near the project prompted neighbors to complain to Laguna Hills authorities, who discovered the work was being performed without a permit and shut it down, "although the room ceiling was covered over so it was not observable from above ground," the contractors said.
In a September 2000 Times story about the dispute, Nicholas said the newest underground structure was "a pump house" to handle water runoff from the horse trails.
The draft complaint disputed that account and claimed the new construction was tied to the alleged separate underground facility being built by Nicholas.
It said Nicholas, anticipating he would eventually obtain a permit from the city "to complete his lair," implemented a backup plan, arranging "to completely fabricate the interior" of the hideaway at a Laguna Niguel warehouse.
The location, referred to as the Pond or the Ponderosa, "was infamous for its excessive extravagance, its sex rooms and its million-dollar sound equipment," the document alleged.
Nicholas had his private jet pick up prostitutes in New Orleans, Chicago, Las Vegas and Los Angeles "and bring them back to the Pond for his rock star friends," the draft complaint said. "He provided his guests with transportation and cocaine, Ecstasy, methamphetamines, marijuana, mushrooms, and nitrous oxide [laughing gas]" -- and even arranged for his private helicopter to land at a nearby hospital helipad, it said.
The lawsuit alleged that Nicholas required pledges of loyalty and secrecy from the contractors and at one point threatened James' life.
Nicholas, in an interview with The Times last week about the Kato suit, said the allegations of drug use against him were especially absurd because he had been recognized by authorities for his efforts to boost law enforcement.